The altcoin market has shed $50B in the past three days amid Bitcoin’s deepening pullback, which has dragged top gems such as Ethereum and Ripple [XRP].
During the extended dip on Wednesday, ETH dropped by another +6%, effectively slipping below $2.62K. This has been a key short-term support level that has held up against selling pressure in September.
Similarly, XRP dumped from $1.5 to an October low of $1.38, marking a 7.3% drop. But beyond the long squeeze and selling pressure, it seems a more discounted entry for bulls could soon open up if the macro landscape improves.
How low can Ethereum and XRP plunge go?
While the recent shakeout has opened a potential discounted window for late bulls, the macro landscape has not fully resolved.
So, between now, next week’s US CPI data, and finally the Fed rate decision at the end of the month, the pullbacks could extend. If so, it could offer better buying levels.
For Ethereum [ETH], that would mean tagging the September support zone of $2.4K or lower at the 200-day Moving Average (MA, blue) at $2.1K.
From a trading perspective, leveraged short-sellers still have opportunities to extend their gains from the current 5% to over 10%. Should the bearish pressure extend to $2.1K, the gains could double to +20% for sellers.
But at the September support (white zone, $2.4K), short sellers should be cautious. Bulls (both leveraged bulls and spot investors) could gain control at this level and trigger a rebound towards $2.62K. If so, that would offer a 10% gain.
For XRP, the setup is nearly the same. The immediate support zones were at $1.35 and the 200-day MA (below $1.30).
Since the recent pullback was close to tagging the first support zone, a short-term reversal could be possible. The overhead hurdle at $1.5 will be the bullish target, suggesting a 13% upside potential.
A sustained dip below the 200-day MA would effectively flip the market structure bearish and invalidate the bullish reversal outlook for XRP.
Is the altcoin rally cooling off?
That said, the altcoin rally seen in Q3 has considerably cooled off in October and is nearing neutral, according to the Altcoin Season Index.
Besides, the Crypto Market Fear and Greed Index (CGI) is back to neutral, further demonstrating that the greed seen during the Q3 rally has eased.
The neutral readings from these two signals point to a potential reversal. However, they could also trend lower if the bearish sentiment persists post-Fed decision.
Final Summary
- Ethereum and XRP could offer new buying opportunities after a +6% pullback.
- Broader market sentiment has flipped from ‘greed’ to ‘neutral,’ but a reversal depends on upcoming macro events.
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