Traders dumped risky assets following the crisis and failure of Silicon Valley Bank (SVB). The S&P 500 Index plunged 4.55% while Bitcoin (BTC) is down about 9% this week.
The collapse of SVB led to a crisis in the crypto space with USD Coin (USDC) losing its peg to the U.S. dollar on reports that $3.3 billion of Circle’s $40 billion of USDC reserves were held at SVB. After trading near $0.87 on March 11, USDC has climbed up above $0.96 at the time of publication.
SVB’s failure has increased uncertainty in the short term with investors closely watching for any signs of the contagion spreading to other regional banks across the U.S.
During times of uncertainty, it is best to stay on the sidelines. However, if there is no domino effect following SVB’s debacle, select cryptocurrencies may start their recovery. The cryptocurrencies selected in the article are all trading above the 200-day simple moving average, a key level watched by long-term investors to determine whether the asset is in a bull or bear phase.
Let’s study the charts of Bitcoin and the four altcoins that may outperform if the sector witnesses a recovery over the next few days.
Bitcoin has corrected back to the 200-day SMA ($20,389). Buyers are expected to defend the level with all their might because a break below it could intensify selling.
On the way up, the 20-day exponential moving average ($22,042) is likely to act as a major hurdle. If the price turns down sharply from the 20-day EMA, the BTC/USDT pair may retest the support at the 200-day SMA. If this level cracks, the pair may slide to $18,400 and then to $16,300.
If bulls want to prevent the decline, they will have to drive the price above the 20-day EMA. If they manage to do that, the pair may pick up momentum and soar toward the overhead resistance at $25,250.
The 4-hour chart shows that the bulls are attempting to start a recovery from $19,550 but the bears are aggressively defending the 20-EMA. If the price turns down from the current level, the bears will again try to sink the pair below $19,950. If they succeed, the pair could fall to $18,400.
Contrarily, if the price turns up and breaks above the 20-EMA, it will suggest that the short-term selling pressure may be reducing. That may start a recovery to $21,480 where the bears will again pose a strong challenge. If this level is scaled, the pair may reach $22,800.
Ether (ETH) dipped below the 200-day SMA ($1,421) on March 10 but the long tail on the day’s candlestick shows solid buying at lower levels.
The recovery is facing resistance near $1,461. If the price turns down from the current level and reaches the 200-day SMA, it will signal that bears are selling on a shallow bounce. That will increase the likelihood of a drop below $1,352. The ETH/USDT pair could then slide to $1,100.
If bulls want to prevent the decline, they will have to thrust the price above the 20-day EMA ($1,548). If they do that, the pair could rise to $1,743 where the bears may again erect a strong barrier. A break above this level will open the doors for a possible rise to $2,000.
The 4-hour chart shows that the pair is attempting a rebound. The 20-EMA is flattening out and the relative strength index (RSI) is just below the midpoint, indicating a balance between supply and demand.
This balance will tilt in favor of the buyers if they push and sustain the price above $1,500. If they do that, the relief rally may reach $1,600. On the other hand, if the price turns down and breaks below the uptrend line, the advantage may tilt in favor of the bears. The pair may then retest the strong support at $1,352.
Polygon (MATIC) corrected sharply from $1.56 on Feb. 18 and reached the 200-day SMA ($0.94) on March 10. The long tail on the day’s candlestick shows that the bulls are fiercely defending the level.
The bulls will try to push the price to the 20-day EMA ($1.15) where the bears are likely to mount a strong defense. If the price turns down from this level, it will suggest that the sentiment remains negative and traders are selling on rallies.
That could increase the prospects of a drop below the 200-day SMA. If that happens, the MATIC/USDT pair might slump to $0.69.
Conversely, if buyers propel the price above the 20-day EMA, it will suggest that the bulls are back in the driver’s seat. The pair could then rise to the overhead resistance at $1.30.
The recovery from $0.94 has reached the 20-EMA. This is an important level to keep an eye on because if the price sustains above it, the pair may rally to $1.15.
This level may again act as a strong resistance but if bulls arrest the next decline above $1.05, it will suggest that the downtrend could be over. That may open the gates for a possible rise to $1.30.
This positive view will invalidate in the near term if the price turns down and breaks below the $0.94 support.
Related: U.S. Treasury Janet Yellen working on SVB collapse, not at bailout: Report
While most major cryptocurrencies have fallen to or below their 200-day SMA, Toncoin (TON) is still way above the level. This suggests that traders are not rushing to the exit.
The TON/USDT pair has formed a symmetrical triangle pattern near the local high. The price action inside the triangle is random and volatile.
Typically, the triangle acts as a continuation pattern. That means the trend that was in force before the formation of the setup resumes. In this case, if buyers kick the price above the resistance line of the triangle, the pair may start a move toward $2.90.
Conversely, if the price continues lower and plummets below the triangle and the 200-day SMA ($1.90), it will suggest that bears are in command. That may pull the price toward $1.30. Such a move will indicate that the triangle behaved as a reversal setup.
The downsloping 20-EMA and the RSI in the negative territory on the 4-hour chart show that bears have the upper hand. If the price turns down from the current level and breaks below $2.18, the drop is likely to extend to $2.
Contrarily, if bulls drive and sustain the price above the 20-EMA, it will suggest that bulls are attempting a comeback. The pair may then rise to $2.45 where the bears may mount a strong defense. If this level is crossed, the bulls try to pierce the triangle near $2.50.
OKB (OKB) is in a corrective phase but a minor positive in favor of the bulls is that it is way above its 200-day SMA ($26).
The next support on the downside is the 50% Fibonacci retracement level of $36.13 and then the 61.8% retracement level of $30.76. The bulls are likely to protect this zone with all their might.
If the price turns up from this zone, the OKB/USDT pair may rise to the 20-day EMA ($45.48). This is an important level to keep an eye on because a break and close above it will signal that the corrective phase may be over.
On the other hand, if the price slips below $30.76, it will suggest that traders are rushing to the exit. The pair may then plunge to the 200-day SMA.
The downsloping 20-EMA and the RSI in the negative territory on the 4-hour chart suggest that bears have the upper hand. There is a minor support near $37.50 but if it gives way, the pair may reach $36.13.
On the contrary, if the price turns up and breaks above the 20-EMA, it will suggest that bulls are trying to regain control. The pair may then rise to $44.35. This is an important resistance for the bears to guard because if it gets taken out, the price could reach $50.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.