Major altcoins could see further declines if they lose important support levels, traders said.
Major altcoins slid on Friday following a dip in the broader market. The total capitalization of the crypto market sank by 2.8% to $2.08 trillion. Altcoins led the decline, which led to an increase in the bitcoin dominance index by 0.5% to 40.1%.
The dip came as broader markets reacted to U.S. inflation hitting four decade-high levels at 7.5% in January. Goldman Sachs priced in up to seven rate hikes this year to battle against inflation, which is expected to lead to an increase in the costs of goods and services.
In the past 24 hours, payments token XRP and Polygon’s MATIC plunged 7.5% each after a rally earlier in the week, while Solana’s SOL and Polkadot’s DOT dropped nearly 6% each. Avalanche’s AVAX token was the best performer with a nominal 0.4% decline, while bitcoin and ether lost nearly 3% and 5% respectively.
XRP fell 10 cents following a charge to $0.91 earlier this week. The tokens saw resistance at the $0.90 level, as marked by CoinDesk earlier this week, to fall under $0.80 in early Asian hours on Friday. Prices reached favorable relative strength index (RSI) readings of 50 – a price-chart indicator calculating the magnitude of price changes – after Friday’s drop, suggesting a brief recovery could be expected ahead. RSI levels above 70 mean assets could see a correction, while below 30 imply a recovery could be in place.
However, FxPro markets trader Alex Kuptsikevich told CoinDesk in an email that a drop for XRP below $0.78 would signal a deeper correction and open a quick path to $0.75. “If all of February’s gains are entirely nullified in the coming week and quotes pull back to below $0.60, it would be safe to speak of a new depressed period with a long-term downside potential of 50% to $0.3,” he said.
SOL lost the $110 support level after breaking above it earlier this week. Prices could fall to the previous support of $100 should the decline continue.
Kuptsikevich added a downside for SOL could be on the cards: “The rise from January 28th to February 7th looked like a technical rebound after being oversold since November. But this growth momentum is quickly fading. We can say for this coin that without positivity for the overall market, it will continue to lose ground faster than bitcoin and ether,” he said.
Top memecoin SHIB dropped 4% following multifold rallies in the past week. Shiba Inu’s SHIB surged 40% on Monday and Tuesday following rumors of an unspecified activity with influential crypto exchange Coinbase. Its LEASH token then surged 43% on Wednesday following the announcement of ‘Shiba Lands’ – a metaverse that would sell parcels of virtual land, purchasable with LEASH, in an upcoming game.
Theta Network’s THETA token was one of the few altcoins above a $1 billion market capitalization to show gains. THETA surged 15% as co-founder Mitch Liu confirmed a seed funding and grant for upcoming blockchain tracking and video licensing platform Replay.
“Launched by experienced technologists and entrepreneurs and utilizing Theta Video API, Theta peer-to-peer video infrastructure, and ThetaPass NFTs to offer content creators and end users a more fair share of revenues,” Liu said. THETA exchanged hands at $4.18 at the time of writing.
This article was originally published on Coindesk by Shaurya Malwa