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| By Alex Benfield |
Yesterday’s inflation data didn’t scare off investors in the crypto market as most assets saw green on the day.
The market has been experiencing a price correction after the big rally that started the year, but at least for the past 24 hours, that correction slowed down and reversed course.
It looks like the market showed investors some love for Valentine’s Day and gave us a break from the sell-off.
Over the course of the rest of the week, we will find out whether this is just a break in this price correction or if the dip was shallower than expected.
For now, none of our big cryptocurrencies sank low enough to retest any big support levels. This leads me to believe there may be another leg down before the correction is truly over.
However, there is a chance that the recent rally off the bear market lows is just the beginning of a bigger move. If the recent price correction from the Feb. 1 highs is already over, then this market might be more bullish than most believe.
Personally, I am leaning toward the scenario where the major cryptos retest support levels before climbing any higher.
For Bitcoin (BTC, Tech/Adoption Grade “A-”), that would mean a retest of the $21,000 level, which is only about 7% lower than current prices. This retest could take place as soon as next week.
That being said, the level we want to watch out for on the upside is $24,000. If BTC can bust above the recent high-water mark there, it may open the floodgates for an extended rally toward $30,000.
Here is BTC in U.S. dollar terms via Coinbase Global (COIN):
Meanwhile, Ethereum (ETH, Tech/Adoption Grade “B”) has also regained some ground over the last two days and is now trading just below $1,600.
ETH has some support near $1,350 if things were to turn bearish again.
Otherwise, the price we want to watch out for on the upside is $1,650. If ETH can break and stay above that level, it could begin to pick up some bullish momentum.
Here is ETH in U.S. dollar terms via Coinbase:
Let’s also look at Polygon (MATIC, Tech/Adoption Grade “B+”), one of the hottest altcoins in the market right now.
The team at Polygon recently announced the upcoming release date of their zero-knowledge Ethereum Virtual Machine, calling it the future of Ethereum scaling. This zkEVM has a multitude of benefits, including speeding up transactions and reducing their cost.
This project could certainly be an incredibly deal, and it will be interesting to see if that narrative can push MATIC to newer highs here in the coming weeks.
Right now, the level to watch is $1.30. Should MATIC break and stay above that level, it could make a run for $1.50.
On the flip side, if the market turns bearish again, MATIC may retest $1. But if MATIC were to retest and hold the $1 level, that could be seen a great sign of strength.
Here is MATIC in U.S. dollar terms via Coinbase:
What’s Next
After an explosive rally to start the year and the first correction of the year that followed, the market is currently sitting at an inflection point. Prices could continue to correct and retest support levels as usual during long, sustained, upward price movement.
Alternatively, the market could explode to new highs and negate the current correction. This is a market behavior we really only see in explosive stages at the very beginning or end of a bull market.
It is certainly way too early to call that, but the price action over the next few weeks may be very telling as to how the rest of 2023 may play out.
Grab your popcorn because either way, things are getting exciting.
Best,
Alex
