Cryptocurrencies falling: The week started with a downfall

This week began with the major cryptocurrencies falling: bitcoin is below $49,000 and ethereum is struggling to hold on to the $4,000 mark.

According to IG analyst Diego Morin, investors have been cautious about trading cryptocurrencies since the collapse late last year, as they have lost important supports and many are trading at old levels that they reached before the collapse in September 2020. One such currency is BTC, which is trading around $48,800 after failing to withstand resistance at the $50k level and going down, so it will be vital for it to hold on to the $46k level.

Ethereum is now near the $4k psychological barrier, so it will be important that it does not fall below that level, otherwise we could see a further decline to the next support, which is located around $3,500.

The market is still dominated by Bitcoin and Ethereum

Alejandro Sala, regional manager of Bitpanda in Spain, is sure: the market is still dominated by two currencies, bitcoin and ethereum, and their movements largely determine the general trend: any big move is reflected on the altcoin market with more volatility.

The current cryptocurrencies falling is reminiscent of the May collapse, when BTC lost about 50% and other altcoins followed it. But the market quickly bounced back from the lows and recovered most of the losses in less than 3 months.

Sala recalled that now, as during that fall, over-collateralized positions have increased volatility and wiped out most of the long positions. The market needs some time to recover, and intraday charts remain volatile, but in the longer term the market is still bullish.