Bitcoin and altcoins faced significant selling pressure recently. Traders decided to reduce their risks after the launch of the DeepSeek AI app. On January 27, Bitcoin (BTC) dropped below $98,000. However, it has since recovered and is trading near the important psychological level of $100,000.
This decline was largely driven by the rapid rise of the China-based AI app, which raised concerns about increased competition in the AI sector. While cryptocurrencies and AI aren’t directly related, this shift led to $864 million in liquidations across the crypto markets in just 24 hours.
Arthur Hayes, co-founder of BitMEX, warned his followers on X about a potential sharp correction in Bitcoin's price. Still, he believes the price could bounce back and reach $250,000 by the end of the year if money printing resumes. Many in the market are closely watching the upcoming Federal Open Market Committee meeting on January 28 and 29. The Fed is expected to pause its rate cuts during this meeting.
Despite Bitcoin’s struggle to hit a new all-time high, MicroStrategy continues to buy more. They purchased 10,107 Bitcoin at an average price of $105,596 between January 21 and 26.
The S&P 500 Index (SPX) gapped down sharply on January 27. This indicates that the market rejected the breakout above 6,100. The key support level to watch is the 20-day exponential moving average at 5,985. If the price bounces back from this support, it suggests that traders are still optimistic and buying on dips. Bulls will try to push the price above 6,100, aiming for a target of 6,347.
However, if the price closes below the moving averages, this positive outlook may change. It could trap aggressive bulls and lead to a drop to the support zone between 5,853 and 5,773.
The US Dollar Index (DXY) fell below the 50-day simple moving average at 107.58. This suggests that bears are trying to regain control. Sellers will likely aim to push the price down to 106.69, which could serve as near-term support. If the price bounces off this level, it might face selling pressure at the 20-day EMA at 108.25. If it declines from the 20-day EMA, the index could drop to solid support at 105.42.
To prevent further declines, buyers need to push the price above the 20-day EMA quickly. Doing so would indicate that the correction may be over. If successful, the index could rise toward 109.46.
On January 27, Bitcoin fell below the moving averages. However, bulls are trying to defend the 50-day SMA at $99,382. Both moving averages are flattening, and the RSI is near the midpoint. This indicates a balance between supply and demand. If the price rises and stays above the 20-day EMA at $101,086, bulls may push the BTC/USDT pair to $109,588.
If the price closes below the 50-day SMA, it may drop to the support level at $90,000. Buyers are expected to defend the $90,000 to $85,000 zone aggressively. If they fail, it could signal a short-term peak.
Ether (ETH) slipped below the neckline of its head-and-shoulders pattern on January 27. If it closes below this neckline, the setup will complete. The ETH/USDT pair could then decline to $2,850, which is expected to provide strong support.
If the price rebounds from $2,850 but then drops from the 20-day EMA at $3,308, it will indicate that bears are selling during rallies. This increases the risk of breaking below $2,850. If that happens, the pair may drop to $2,400. For bulls to limit the downside, they must quickly push the price back above the 50-day SMA at $3,455. If they do, the pair may rally to $3,745.
XRP (XRP) continued its downward trend and broke below the breakout level of $2.91 on January 27. This suggests profit-taking at higher levels. The long tail on the candlestick shows solid buying near the 50-day SMA at $2.54. If the price holds above $2.91, bulls will try to push the XRP/USDT pair to the downtrend line. A break and close above this line would improve the chances of resuming the uptrend.
On the other hand, if the price declines below the 50-day SMA, it signals that bulls are losing control. This could accelerate selling, leading the pair down to $2.20 and possibly $2.
Solana (SOL) struggled to maintain levels above $260, prompting short-term traders to take profits. The SOL/USDT pair sharply declined on January 26, breaking below the 20-day EMA at $231 on January 27. The pair could drop to the 50-day SMA at $211, which is expected to act as strong support. However, bears are likely to continue selling rallies. If the 50-day SMA fails, the pair may dive to $200 and then to $180.
This negative outlook will be invalidated if the price stays above the 20-day EMA. That would indicate solid demand at lower levels, allowing the pair to attempt a rally back to $260.
BNB (BNB) fell and broke below the uptrend line on January 27 but bounced back from the $635 support. The relief rally is expected to face resistance at the uptrend line and the moving averages. If the price turns down from these resistances, it will signal that bears are in control. This increases the risk of a break below $635, potentially leading to a drop to $593.
Conversely, if the price rises above the moving averages, it suggests that the BNB/USDT pair may remain range-bound between $635 and $745 for a few more days.
Dogecoin (DOGE) broke below its ascending channel pattern on January 27, indicating that bears are gaining control. There is solid support at $0.30. However, if this level breaks, the DOGE/USDT pair could descend to the 61.8% Fibonacci retracement level of $0.27 and eventually to the breakout level of $0.23. Such a deep correction would suggest that the pair may have topped out in the near term.
If buyers want to make a comeback, they will need to push the price above the moving averages. This could lead to an increase to $0.40 and later to $0.43.
Cardano (ADA) closed below the uptrend line of its symmetrical triangle pattern on January 26. This indicates that uncertainty has resolved in favor of the bears. The bulls are defending the support at $0.87, but any recovery is expected to face selling at the moving averages. If the price turns down sharply from the moving averages, it will suggest that bears remain in control. This increases the possibility of a drop to $0.80 and subsequently to $0.76.
The first sign of strength will be a break and close above the 20-day EMA at $0.98. If this happens, the ADA/USDT pair may attempt a rally to the resistance line.
Chainlink (LINK) struggled to rise above the overhead resistance at $27.41. This may have attracted profit booking by short-term traders. The LINK/USDT pair dropped below the moving averages, but the long tail on the candlestick shows buying at lower levels. If the price maintains above the moving averages, bulls will make another attempt to push the pair above $27.41. If they succeed, the pair could rise to $31.
On the contrary, a close below the moving averages will indicate range-bound action between $20 and $27.41 for some more time.