Crypto Markets Diverge: Bitcoin Rebounds, Alts Weaken

Key Moments

Bitcoin Holds Support as Recovery Effort Continues

At the time of writing on Friday, Bitcoin (BTC) is showing tentative signs of improvement as the broader crypto market works through the aftermath of this week’s sell-off. BTC is trading around $89,900, extending a recovery that began after price found support near the midpoint of a key trading range.

Earlier in the week, BTC started on a weak footing, ending a session below two important technical zones: the 50-day Exponential Moving Average (EMA) at $91,942 and the previously broken upper boundary of its consolidation pattern at $90,000. The decline carried price back to the midpoint of a horizontal parallel channel at $87,787, where BTC found support on Wednesday and staged a modest rebound that continued into Thursday.

If the current bounce persists, BTC could work its way back toward the 50-day EMA at $91,942, a level that now represents a key resistance area.

Momentum indicators are sending mixed signals. On the daily chart, the Relative Strength Index (RSI) is at 44 and pointing higher toward the neutral 50 threshold, signaling that bearish pressure has started to ease. For buyers to maintain control, the RSI would need to push decisively above that neutral line. At the same time, traders are watching the Moving Average Convergence Divergence (MACD) indicator, which registered a bearish crossover on Tuesday, indicating lingering downside pressure despite the recent rebound.

On the downside, a daily close below $87,787 would weaken the current recovery structure and could open the door to a deeper pullback toward the lower boundary of the consolidation range at $85,569. That level also aligns with the 78.6% Fibonacci retracement.

Ethereum Stalls Below $3,017 as Downside Risks Persist

Ethereum (ETH) is underperforming BTC and remains constrained beneath former support levels. The asset extended its correction by more than 10% through Tuesday, sliding below the 50-day EMA at $3,135 and losing the daily support level at $3,017, which now acts as resistance.

ETH attempted to stabilize on Wednesday, posting a minor recovery attempt. However, it failed to reclaim a daily close above $3,017 and eased lower again on Thursday. As of Friday, ETH is trading around $2,964.

As long as $3,017 caps the upside on a daily closing basis, the path of least resistance remains lower. In that scenario, ETH could continue to retreat toward the 61.8% Fibonacci retracement level at $2,749.45. This Fibonacci retracement is measured from the April low at $1,385 to the August all-time high at $4,956.

Technical indicators currently favor sellers. The daily RSI is at 40, below the neutral 50 line, reflecting increasing bearish momentum. In addition, the MACD indicator produced a bearish crossover on Tuesday, reinforcing the negative outlook.

A shift in tone would require ETH to close back above the $3,017 resistance level. A sustained move over that threshold could clear the way for a recovery toward the 50-day EMA at $3,135.

XRP Extends Pullback as Sellers Target $1.77

Ripple (XRP) continues to struggle after being rejected at the 50-day EMA at $2.04 last week. Since the weekend, XRP has fallen more than 8%, culminating in a daily close below support at $1.96 on Tuesday.

The token attempted a rebound on Wednesday, but similar to ETH, it could not finish the day above the $1.96 level and slipped again on Thursday. By Friday, XRP is trading around $1.91, reflecting ongoing pressure from sellers.

If the current correction resumes, XRP could break lower toward the December 19 low at $1.77, which is the next significant downside reference point. Technical indicators align with this bearish bias, as both the RSI and MACD for XRP are signaling a negative momentum backdrop, similar to what is observed in Ethereum.

For buyers, an important hurdle lies at the $1.966 daily resistance. A recovery that manages a close above $1.966 could trigger additional gains, potentially allowing XRP to revisit the 50-day EMA at $2.04.

Understanding Core Cryptocurrency Market Metrics

Circulating Supply

The circulating supply of a cryptocurrency is determined by the rules set by its creator or development team, including the total number of tokens that can ever be issued. Only a defined quantity of tokens can be minted through mechanisms such as mining, staking, or other processes, as governed by the underlying blockchain algorithm. Circulating supply can be reduced over time through token-burning events or by tokens being irretrievably sent to incompatible blockchain addresses.

Market Capitalization

Market capitalization is calculated by multiplying the circulating supply of a cryptocurrency by its current market price. This metric provides a snapshot of the asset’s overall market value.

Trading Volume

Trading volume measures the total number of tokens exchanged between buyers and sellers within a given period, such as over 24 hours. It includes activity across both centralized and decentralized exchanges. Market participants use this metric to gauge sentiment and liquidity, as rising volume often reflects growing interest in buying and selling a particular cryptocurrency.

Funding Rate

Funding rates are used in perpetual futures markets to encourage balance between long and short positions and to keep perpetual contract prices aligned with spot or index prices. These mechanisms involve periodic payments between traders:

• When the funding rate is positive, perpetual contract prices are above the mark price, and traders holding long positions pay those holding short positions.
• When the funding rate is negative, perpetual contract prices trade below the mark price, and traders with short positions pay those who are long.

This structure helps ensure that perpetual futures prices regularly converge with underlying spot market levels.