Last week, we noted bearish set-ups in Ethereum and Bitcoin. Indeed, the sector as a whole has weakened and took a big spill yesterday on headlines of a Korean exchange hack. Generally, with the sector having lost its luster and the current environment viewed as part of a longer-term unwind in price and speculative interest, negative headlines are likely to be more of a bear than positive ones will be a boon.

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Bitcoin broke 4-month trend-line support

In last week’s commentary, we noted a short-term bearish set-up in Bitcoin, but also highlighted a 4-month-long trend-line not far below which may help keep it supported and in the process of building a broader wedge pattern.

Yesterday’s downdraft clearly wiped out the trend-line, and support at 6400 and just above 5900 are both at risk of breaking in the near-term. A decline below the spike-low at 5920 would likely set off an acceleration in selling, as it was an important low following the bloodbath off record levels.

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BTC/USD Daily Chart (Trend-line broken)

BTC/USD daily log chart, trend-line break could be beginning of more levels breaking

Litecoin broke one series of support levels, others could be next

While the lower-highs since December and the lows at relatively the same price in recent months don’t make for a textbook descending wedge, the increasingly smaller rallies in the past 7 months imply LTC/USD may be ready for another round of carnage.

Yesterday marked the lowest closing print since December and below the March and late-May lows. Take out 102 and the phycological level of 100 and we may see another big leg lower in the weeks and months ahead.

LTC/USD Daily Chart (Lower-highs, support breaking)

LTC/USD daily log chart with bigger-picture bearish price action, support breaks

Helpful Resources for Cryptocurrency Traders

Whether you’re a new or experienced cryptocurrency trader, we have several resources to help you;Introduction to bitcoin trading guide, indicator for tracking trader sentiment, and a weekly webinar discussing the latest developments.

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX