U.Today – Critical support is at the 26 EMA, a level that has been holding ground for the asset. The short-term trajectory of the asset will likely be determined by the ongoing battle at this price. A recovery may be possible if XRP can rebound there, which could signal a reversal of the current downtrend. However, there could be serious downside repercussions if the above is broken.
In line with the downtrend line of XRP, the 26 EMA is acting as dynamic support. The reversal is more important because of this confluence which increases pressure on the asset. Increased trading volume, combined with a successful move above the 26 EMA, could push XRP back towards the $2.20 and $2.50 levels. Such a breakout could revive buying interest and potentially give market participants more confidence.
Conversely, there could be serious repercussions if XRP is unable to overcome this hurdle. The asset could test lower support levels if it is rejected at this level, which could confirm the current downtrend. After $1.79 which corresponds to the 100 EMA, $1.47 is the first noticeable support level.
The XRP market structure will be severely weakened by a breakdown below these levels which could push the price closer to the next important support area at $1.07. In addition, the relatively low trading volume that has accompanied XRP's recent moves is also cause for concern.
He wakes up
Ethereum has formed a higher bottom which is a strong bullish signal in the short term and is showing encouraging signs of recovery. This change indicates that the market may be preparing for a period of recovery, which may reverse the recent downward trend. The lack of significant trading volume also supports the diminishing selling pressure highlighted by the formation of higher lows.
Low trading volume may seem alarming at first glance but it also means that downward momentum is waning. Bulls may be able to regain control in the coming weeks as a result, especially if January sees new capital entering the market. The 50 moving average, a crucial indicator of short-term market trends, is one of the crucial support levels that ETH currently holds. The asset may soon test the $3,544 resistance level if it continues to move higher.
Ethereum's reputation will likely be restored if it crosses this level, opening the door to a test of the $3,800 range. But the overall downward trend of the market is still a cause for concern. Ethereum's full recovery remains hampered by broader market sentiment.
High trading volume and increased buyer participation are essential for ETH to maintain its upward trajectory. Ethereum may face a turning point in January. Historically, there has been a resurgence of interest in the cryptocurrency market at the beginning of the year. ETH could pave the way for a stronger recovery if it can maintain its current trajectory and stay above $3,000.
Losing against the dollar
At levels that have significantly impacted Bitcoin's momentum, DXY is still rising. Historically, there has been an inverse relationship between Bitcoin and DXY: Bitcoin finds it difficult to sustain highs when the dollar rises. As the DXY rises, this dynamic is repeated. Bitcoin has been under pressure to decline due to the recent rebound in DXY which is currently trading at around 108.
Due to the Federal Reserve's ongoing monetary tightening policies and strong economic data, investors' confidence in the US economy is reflected in the strength of the dollar. As a result, demand for dollar-denominated assets has increased, leading to a move away from riskier options such as Bitcoin.
As the dollar grows stronger, Bitcoin's recent rally has stalled. Bitcoin lost momentum after trying to break the psychological barrier of $100,000 and is currently trading below important resistance levels. Since outflows from the cryptocurrency market are often caused by a strong dollar, DXY's growth has made it difficult for Bitcoin to sustain buying interest.
Bitcoin is seen as a hedge against the decline in the value of fiat currencies which explains this inverse relationship. Investors turn to Bitcoin as an alternative store of value when the dollar declines. However, a rise in DXY reduces this appeal and sends Bitcoin into a bear market. The future prospects for Bitcoin's recovery depend on a possible reversal in the DXY trend. If Bitcoin stabilizes or declines, it may gain more strength and possibly start rising again.
