Crypto Wars: Does Bitcoin Or Ethereum Look Stronger Following Wednesday’s Mini-Flash Crash?

Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) suffered a mini-crash on Wednesday when Bitcoin fell through a key support level at $44,850, which caused Ethereum to lose $3,600 as support.

On Thursday, both apex cryptocurrencies were working to print reversal candlesticks on their daily charts, which indicates at least a relief bounce may be in the cards through Friday and into the weekend.

Whether Bitcoin and Ethereum are able to make a trend change to the upside will take some time to play out, but aggressive bullish traders may be set for a short-term trade.

It should be noted that events affecting the direction of the general markets can quickly invalidate patterns, especially in the historically volatile crypto sector. As the saying goes, “the trend is your friend until it isn’t,” and any trader position should have a clear stop set in place and manage their risk versus reward.

See Also: Bitcoin, Ethereum, Dogecoin Drop Sharply As Rate Hikes Coming Sooner Than Expected — But Hodlers Remain Unfazed

In The News: Turmoil in the cryptocurrency sector over the past few months can at least partially be linked to governmental policies, as leaders are burdened with finding ways to regulate mining and trading of a currency designed to not have a centralized authority.

When El Salvador adopted Bitcoin as legal tender on Sept. 7, the crypto plummeted over 18% lower, and although it bounced up briefly over the days that followed it declined a further 8% during that month due to a country-wide ban instated in China.

As 2022 kicks off, political instability looks set to add to the volatility in the crypto sector with reports that political protests in Kazakhstan tanked Bitcoin’s mining hash rate, while in Abkhazia violence broke out between illegal Bitcoin miners and thieves battling over mining rigs. Both events have been identified as factors in Wednesday’s crypto sell-off.

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The Bitcoin Chart: On Thursday, Bitcoin was printing a long legged doji candlestick off the $42,500 level, which paired with Wednesday’s price action has created a bullish tweezer bottom pattern. The doji candlestick is often found at the bottom of a trend and can indicate higher prices will come on Friday.

Bitcoin’s relative strength index (RSI) is measuring in at about 32%, which can be a buy signal for technical traders because it indicates the crypto is near to oversold territory.

  • Bullish traders should note Thursday’s price action, which is taking place completely within Wednesday’s range, has created an inside bar pattern that leans bearish. Traders can watch for a break of the pattern on Friday to gauge future direction.
  • Bitcoin has resistance above at $44,850 and $46,718 and support below at $42,223 and $40,000.

The Ethereum Chart: Like Bitcoin, Ethereum was printing a reversal signal on Thursday in the form of a hammer candlestick, which indicates higher prices may come on Friday.

  • Ethereum’s RSI is hovering near the 34% range, which indicates a bounce is likely to come.
  • If Ethereum is able to pop up over the $3,894 level it will negate the current downtrend, but if the crypto prints another reversal candlestick below that level, traders can assume the lower high is in and the downtrend is likely to continue.
  • Ethereum has resistance above at $3,610 and $3,949 and support below at $3,240 and $3,000.


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