Cryptocurrencies Meltdown But Selling Likely Overdone

Cryptocurrencies hit new lows today as the losses accelerated. Bitcoin hit $162 per coin, Litecoin fell to a low of $1.05 and Peercoin was quoted at $0.24 few hours ago. As expected, the break of the important BTC/USD support at $266 sent bitcoin in a tailspin, falling over $100 dollars in two days, a loss of almost 40 percent! The altcoin meltdown was equally as damaging. As we’ve said before, $266 is a previous swing for BTC that was the highest high for most of 2013. It was also the breakout point for bitcoin’s latest major rally from $266 to a high of $1090. A break below here means that all the gains of that rally (and more) have now been invalidated.

Peercoin Falls 46 Percent

In our last PPC update one week ago, we mentioned that we would need to a see a break of $0.45 for a resumtion of the downtrend. Since then, the crypto fell below $0.45 and proceeded to lose over 46 percent, falling to a low of $0.24 earlier today. But there are signs that the selling may be overdone.

Since the $0.24 low was reached, PPC/USD rallied by over 35 percent to $0.32. We have formed somewhat of a V-shaped reversal pattern. This doesn’t mean that going long here is a good idea. I never advocate going against the prevailing trend which on the medium and longterm timeframes is still down. But on the short-term, the losses may be overdone, evidenced by the strong retracement. A PPC/USD move to new lows below $0.24 would invalidate this view and likely lead to more losses.

Litecoin Hits $1.05

Alternative cryptocurrency Litecoin hit a new low of $1.05 today. But similarly to Peercoin, the losses and today’s subsequent major reversal indicate that we may be at oversold levels. To confirm this and put an end to the downtrend, LTC/USD need to climb and stay above $1.35 per coin. On the chart below we can see that the pair has been trying to establish a foothold above here for the past two days.

We are currently trading very close to the mark at $1.33. Again, due to strong bearish trends that are still present on the medium and longer-term charts, going long on a break of $1.35 is not advised. But in the short-term, a clearing of this level should help the bulls to breathe a sigh of relief. A Litecoin break of the $1 parity level would lead to a resumption of the downward momentum and more losses.

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