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

Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) It had a small crash on Wednesday when Bitcoin fell through a major support level at $44,850, causing Ethereum to lose $3,600 as support.

On Thursday, both major cryptocurrencies were printing reversal candlesticks on their daily charts, which at least indicates a bounce bounce is in the cards through Friday and into the weekend.

Whether Bitcoin and Ethereum are able to change the trend to the upside will take some time, but aggressive bullish traders may be ready to trade short term.

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

SEE ALSO: Bitcoin, Ethereum and Dogecoin Drop Sharply as Prices Rally Closer Than Expected – But Traders Still Unfazed

In the news: The turmoil in the crypto sector over the past few months can be linked at least in part to government policies, with leaders bearing the burden of finding ways to regulate mining and the circulation of currencies designed not to have a central authority.

When El Salvador adopted bitcoin as legal tender on September 7, the crypto dropped more than 18%, and although it bounced briefly over the ensuing days, it dropped another 8% during that month due to a nationwide ban in China.

As 2022 kicks off, it appears political instability will add to the volatility in the crypto sector with reports that political protests in Kazakhstan have led to a drop in bitcoin mining hash rate, while violence erupts in Abkhazia between illegal bitcoin miners and thieves fighting over mining rigs. . Both events were identified as factors in the cryptocurrency sell-off on Wednesday.

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Bitcoin chart: On Thursday, Bitcoin was printing a long-legged doji candle from the $42,500 level, which combined with Wednesday’s price action creating a bullish bust pattern. The doji candlestick is often found below the trend and can indicate a higher price on Friday.

The Bitcoin Relative Strength Index (RSI) measures around 32%, which could be a buy signal for technical traders as it indicates that the cryptocurrency is close to oversold territory.

  • Bullish traders should note that Thursday’s price action, which takes place entirely in a range on Wednesday, has created an internal column pattern that is tilted to the downside. Traders can watch the breakout of the pattern on Friday to determine the future direction.
  • Bitcoin has higher resistance at $44,850 and $46,718 and support below at $42,223 and $40,000.

Ethereum chart: Like Bitcoin, Ethereum was printing a reversal signal on Thursday in the form of a hammer candle, indicating a price rally on Friday.

  • Ethereum’s RSI is hovering near the 34% range, indicating the possibility of a rebound.
  • If Ethereum is able to emerge above the $3,894 level, it will invalidate the current downtrend, but if the cryptocurrency prints another reversal candle below this level, traders can assume that a lower high is present and the downtrend is likely to continue.
  • Ethereum has higher resistance at $3,610 and $3,949 and support below at $3,240 and $3,000.

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