Crypto collapses over the weekend: Will we retest the summer lows?

There’s a downside to having a market that never closes, as crypto bulls who were hoping to enjoy their weekend just found out.

Friday’s selloff in Bitcoin, Ethereum and other cryptoassets turned into a rout heading into the weekend, and prices aren’t yet seeing much reason for optimism yet in the new week. There was little in the way of fundamental or macroeconomic news to drive the selloff; rather traders’ appetite for risk assets has simply collapsed across the board.

From a technical perspective, the big drop has done durable damage to the charts. Looking at Bitcoin, prices bounced off their June lows, forming a rising channel to retrace back to their 50-day EMA last week. Following this weekend’s precipitous drop, the largest cryptocurrency has definitively broken below its rising channel, leaving a bearish near-term bias for a potential retest of the summer lows near $18,700:

Source: StoneX, TradingView

Turning our attention to Ethereum, the world’s second largest cryptoasset saw a far more impressive rally through the summer, effectively doubling off its June lows compared to “just” a 35% rally in Bitcoin. Ethereum continues to benefit from speculation around next month’s “Merge,” when the network will transition to the more environmentally friendly proof-of-stake security and supply growth is projected to flip negative.

Nonetheless, Ethereum is falling sharply in-line with its larger rival to start this week’s trade. The ETH/USD price is now trading below its 50-day EMA, with bears now eyeing support at the late July swing low near $1375, the midsummer range high at $1275, and the multi-year low around $1000:

Source: StoneX, TradingView

After the dramatic blowups and deleveraging we saw in May and June, an long-term V-shaped bottom this summer was always unlikely. As we flip the calendar into September, the key question for crypto traders may well be whether we go on to break this summer’s lows or merely retest them to set the stage for the next bull cycle.

How to trade with FOREX.com

Follow these easy steps to start trading with FOREX.com today:

Open a Forex.com account, or log-in if you’re already a customer.
Search for the pair you want to trade in our award-winning platform.
Choose your position and size, and your stop and limit levels.
Place the trade.

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

The products and services available to you at FOREX.com will depend on your location and on which of its regulated entities holds your account.

FOREX.com is a trading name of GAIN Global Markets Inc. which is authorized and regulated by the Cayman Islands Monetary Authority under the Securities Investment Business Law of the Cayman Islands (as revised) with License number 25033.

FOREX.com may, from time to time, offer payment processing services with respect to card deposits through StoneX Financial Ltd, Moor House First Floor, 120 London Wall, London, EC2Y 5ET.

GAIN Global Markets Inc. has its principal place of business at 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA., and is a wholly-owned subsidiary of StoneX Group Inc.