- The altcoin market needs a roughly 10% rise to stabilize; Ethereum's possible reversal could help recovery.
- However, Ethereum faces high selling pressure despite strong demand, with $2,735 critical for recovery.
- Cardano and Litecoin gain momentum from ETF developments.
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Despite a quick rebound from last week's sharp downturn, the altcoin market remains in a correction phase. Overall, it needs to assertively rise by around 10% and stabilize above the $1.35 trillion market cap from its current $1.24 trillion to sustain recovery and avoid further selling pressure.
Bitcoin's recent divergence from the altcoin market further cements the trend as the ETH/BTC pair retraces to 2021 levels, with Bitcoin's dominance at 64%.
The silver lining for bulls is the fact that a reversal in Ethereum's trajectory would likely spark a broader altcoin market revival. Last week's buying interest at $2,100 ETH shows potential, yet current levels remain vulnerable.
Let's take a deeper looks at three non-Bitcoin cryptocurrencies poised for significant moves in the near term, starting with ETH.
Ethereum: Decline Increases risk of Bear Traps
Forecasts of further depreciation have fueled further selling in ETH, with short positions jumping by 500% since November 2024 and 40% in the last week. Yet, institutional demand for Ethereum remains strong, raising concerns over a possible short squeeze.
Last week's ETF data revealed $420 million in ETH inflows, surpassing Bitcoin's. However, the rebound hasn't been enough to stabilize the cryptocurrency.
ETH Technical View
Ethereum's downward trend accelerated after it lost support at $3,300 early in the year. The Fib 0.786 support at $2,735 became significant once the $3,000 support was breached.
Last week, the decline slowed around $2,600, making the $2,735 level crucial again. For recovery, Ethereum needs to close daily above $2,735, potentially targeting the Fib 0.618 value near $3,000, a key level for reversing the trend. Failing to regain $3,000 during a bullish phase could further accelerate the downtrend.
Achieving a weekly close above $2,735 marks the first step in recovery. If selling pressure persists and ETH closes daily below this level, the downtrend may extend towards $2,300, filling the gap from last week's rapid decline.
Cardano's Price Boosted by ETF Developments
Grayscale has filed for a spot Cardano ETF in the US, marking its first standalone investment product centered on the ADA asset.
This news positively influenced Cardano's market value. However, ADA's past classification as a security by the SEC might complicate the approval process.
Despite this, Grayscale's inclusion of ADA in other major ETF applications is seen as a positive step. Approval of one of these altcoin ETF applications could set a favorable precedent, boosting ADA's chances for ETF approval and increasing institutional demand.
ADA Technical View
ADA saw a significant surge in the November uptrend and, during the subsequent correction phase, maintained strength mostly between $0.88 and $1.13. However, a broad market sell-off at the start of the month pushed ADA to find support around $0.67 at Fib 0.618 after losing the $0.88 support.
With recent ETF developments, ADA might enter a more mature recovery if it regains the $0.88 level. Rising above this point would bring ADA into positive territory, exceeding short- and medium-term EMA values. In a bullish scenario, ADA could aim for $1.2 and possibly continue the trend towards $1.4-$1.6.
On the downside, $0.77 serves as the first support level. Losing this support in profit-taking could lead to a retest of the $0.67 mark, which, if lost, would invalidate the bullish outlook.
Litecoin Likewise Making Moves on ETF Woes
After the recent crash, Litecoin quickly rebounded, fueled by momentum from LTC-based ETF applications and Nasdaq's application to list LTC ETFs. Technically, Litecoin maintained its key psychological support at $100 during last week's decline, consolidating between $100 and $135.
As Litecoin edges back towards the $135-$140 resistance area, a potential breakout could target the $145-$155 range in the short term. If Litecoin fails to break above $135, it may continue fluctuating within its consolidation zone. On the downside, $120 serves as initial support, with potential declines towards $110 and $100 if breached.
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Disclaimer: This article is written for informational purposes only. It is not intended to encourage the purchase of assets in any way, nor does it constitute a solicitation, offer, recommendation or suggestion to invest. I would like to remind you that all assets are evaluated from multiple perspectives and are highly risky, so any investment decision and the associated risk belongs to the investor. We also do not provide any investment advisory services.