Chaos ahead of US elections as the cryptocurrency market bleeds

• Bitcoin’s downtrend has extended to $ 13,000 due to widespread losses in the market.
• Ethereum revisited the crucial support at $ 370 after losing the anchor at the 200 SMA.
• Ripple has bounced off the support provided by the x-axis of a descending triangle.

The cryptocurrency market succumbed to another unexpected selloff on Tuesday during the Asian session. These losses that saw major cryptocurrencies like Bitcoin, Ethereum and Ripple drop dramatically are likely triggered by regulatory news from Hong Kong. The Securities and Futures Commission (SFC) said it will require regulation of all cryptocurrency trading platforms.

The selloff expanded to other crypto assets, wiping about $ 17 billion from the total market capitalization. Currently, the entire market value stands at $ 384 billion, down from $ 404 billion, as reported by CoinMarketCap on Tuesday. An increase in 24-hour trading volume from $ 64 billion to $ 86 billion highlights the magnitude of the selling pressure. The US presidential election is looming, bringing more caution and risk aversion to the cryptocurrency market.

Cryptocurrency market capitalization chart

Bitcoin bears take back control

The flagship cryptocurrency recently recorded a giant high of $ 14,000, when it hit a new annual high of $ 14,100. However, a turnaround quickly occurred, sending the cryptocurrency king to the same $ 14,000 level. Instability due to news regarding trade regulation in Hong Kong extended the bottom leg to $ 13,500. BTC / USD also crossed below the 50 simple moving average in the 4-hour range, paving the way for losses that see $ 13,000.

The ongoing dips are likely to retry at $ 13,000, especially if the short-term buyer congestion zone at $ 13,200 breaks. Looking further down, the 100 SMA is in line to provide an anchor below $ 13,000, while the 200 SMA will cushion BTC from plunging to levels below $ 12,000. According to the Relative Strength Index (RSI), the path of least resistance is down, at least for now.

BTC / USD 4-hour chart

On the flip side, the bearish outlook will be invalidated if Bitcoin closes the day above the 50 SMA. Such price action will encourage investors to stand still and stop panic selling. An increase in purchase orders could create enough volume to support earnings over $ 13,500. Additionally, the TD Sequential Indicator recently presented a buy signal in the form of a red nine candle on the 4 hour chart.

Ethereum holds the critical support firmly at $ 370

Ethereum’s $ 400 correction sent the price back into a parallel descending channel formed on the 4-hour chart. The losses also extended below the $ 380 and 200 SMA. On the bright side, buyer congestion at $ 370 remained intact.

According to the Moving Average Convergence Divergence (MACD), the path with the fewest obstacles is still down. Furthermore, the break of the support at the 200 SMA is now hindering the price movement. Should Ethereum slide below $ 370, losses to $ 360 would become apparent and bring the picture to the below $ 340 support area.

ETH / USD 4-hour chart

The expected bearish trend would be removed from the picture if Ethereum closed the day above the 200 SMA. Further price action above $ 380 could require more buy orders, thus creating enough volume for a reversal to $ 400. However, buyers should be aware of potential delays in recovery due to the resistance highlighted by the 50 SMA. Another hurdle to keep in mind is 100 SMA above $ 390.

Ripple extends the breakdown to $ 0.23

Ripple traded below a descending trend line as the rejection suffered marginally above $ 0.26. Several interim support levels, including $ 0.25 and $ 0.24, tried but failed to stop the losses. The large market decline on Tuesday updated the support at $ 0.23.

The RSI shows signs of recovery after reaching oversold levels. The XRP price action above $ 0.23 should trigger a rally. The extent of the reversal will depend on whether sufficient volume will be created from the current price level. On the upside, resistance is expected at $ 0.24, 50 SMA and the confluence formed by 100 SMA and 200 SMA.

XRP / USD 4-hour chart

On the downside, the support of the descending triangle needs to hold on to strengthen the buyer congestion area at $ 0.26. Traders should keep in mind that action below the x axis could bring panic to the market, resulting in more selling pressure and more significant losses below $ 0.20.