The altcoin market, collectively valued at around $685.2 billion at press time, is exhibiting signs of vulnerability, prompting analyst Moustache to caution traders about a potential “storm” brewing in the sector.
Despite establishing a 24-hour high of $700.08 billion, the altcoins market has retreated, dipping 1.43% over the past day. This decline comes amidst a technical flag formation, suggesting a potential downward trend.
Further reinforcing the bearish sentiment is the Relative Strength Index (RSI) indicator, which signals a decrease in buyer strength. As the RSI line approaches the RSI Simple Moving Average (SMA) line, the likelihood of a drop in the altcoin market cap increases.
However, a bullish scenario could unfold if the altcoin market manages to close above the $684.566 billion support level today. Such a move could trigger an influx of capital, propelling the market towards the next resistance level at $747.988 billion.
Analyst’s Take: Altcoins Gearing Up for Volatility
Analyst Moustache, closely monitoring the altcoin market’s movements, believes that the current fluctuations could precede a more significant storm.
While acknowledging potential dips, Moustache advises traders to view these as buying opportunities.
Technical Indicators Paint Mixed Picture
The Moving Average Convergence Divergence (MACD) indicator, a technical analysis tool used to assess momentum, presents a mixed picture. While the MACD line remains above the MACD signal line, suggesting a potential upward trend, the overall market sentiment leans towards bearishness.
Potential Scenarios for Altcoins Market
Should the bearish technical flag formation materialize, the altcoin market cap could plummet below the crucial $684.566 billion support level. This could trigger a further decline towards the subsequent support level of $621.085 billion, or even as low as $574.789 billion in an extremely bearish scenario.
On the other hand, if the altcoin market successfully closes above the $684.566 billion support level today, it could signal a reversal of the current downtrend and pave the way for a rally towards the $747.988 billion resistance level.
Traders Advised to Exercise Caution
As the altcoin market navigates uncertain waters, traders are urged to exercise caution and employ risk management strategies. Utilizing dips as buying opportunities and closely monitoring technical indicators could help traders navigate the potential storm ahead.
Some coins that will potentially lead the market are Ripple (XRP), Cardano (ADA) and Solana (SOL).
