Bitcoin Awaits for High Volatility
The so-called “September Effect” continues to haunt investors, especially those in the cryptocurrency industry. Since 2010, the flagship cryptocurrency Bitcoin has suffered significant corrections during September, and this year the same history appears to be repeating itself. Bitcoin is down more than 14% since the beginning of the month, and the losses may increase.
Indeed, BTC’s failure to stay above the $11,000 level is something to be concerned about. The rejection from this critical support barrier on Monday, September 21st, pushed prices back to the $10,500 mark. Given the correction’s significance, Bitcoin spent most of Tuesday’s trading session hovering around this level.
When looking at the hourly chart, the pioneer cryptocurrency was mostly stuck within a $100 trading range on September 22nd. The $10,400 support rejected any downward price action while the $10,500 resistance contained prices from advancing further. Although there were two occasions where BTC traded outside of this range, it quickly reversed back to it.
The lackluster price action seen on Tuesday, September 22nd, saw the Bollinger bands squeeze within the 1-hour chart, indicating that a period of high volatility is coming soon. But for now, Bitcoin could be bound for more consolidation until either the support or resistance levels previously mentioned break. As the bellwether cryptocurrency mostly remained dormant throughout Tuesday’s trading session, investors were only able to grasp a 0.91% daily return.
Ethereum Remains Dormant While Whales Accumulate
Like Bitcoin, Ethereum looks bound for further losses. The smart contracts giant broke out of a bear pattern on Sunday, September 20th, and since then, it has done nothing but depreciate in price. This technical formation forecasts that ETH may continue to plummet all the way down to $235, representing a 35% downswing from the breakout point.
Despite the high probabilities of further losses, on-chain data reveals that large investors have been taking advantage of the downward price action to add more tokens to their holdings. The top 100 Ethereum non-exchange addresses now hold over 26 million ETH combined. This is a 20.6% jump in cumulative holdings compared to two months ago.
Given the rising buying pressure behind Ether, prices seem to have taken a breather on Tuesday, September 22nd. On this day, the second-largest cryptocurrency by market capitalization remained stagnant. Its price mostly traded between an $11 range marked by the $335.6 support and the $346.6 resistance level.
The volatility levels were so low on Tuesday’s trading session that Ethereum closed 0.68% higher than where it opened. Regardless of the minuscule returns, the Bollinger bands are also squeezing on ETH’s 1-hour chart. Such behavior indicates that a significant price movement is underway, so traders beware.
A Major Price Movement on the Horizon
The top two cryptocurrencies by market capitalization appear to have entered a consolidation period after the significant losses incurred so far this month. While everything from a technical perspective indicates that prices will drop further, there is still hope among market participants that the downtrend will reverse. But the only way the bearish outlook will be jeopardized is if Bitcoin regains the $11,000 as support and Ethereum rises above $400.
Until this happens, investors should be prepared for a steeper correction. A further spike in the selling pressure behind BTC could see it drop towards $9,000. Meanwhile, the bear flag that developed on ETH’s daily chart forecasts a target of $235.
Executive Director at CEX.IO