$BTC

Support Levels Following Significant Correction: What's Next?

Date: Mon, Jan 27, 2025, 09:35 AM GMT

The cryptocurrency market today is experiencing a significant downturn, with Bitcoin (BTC) plummeting by over 5% to trade below $100,000. This decline has coincided with a global pullback in financial indices, potentially fueled by the launch of China’s Deep Seek AI Model. The AI model, reportedly running on reduced-capability chips, raises concerns over U.S. technological dominance, adding to the market’s uncertainty.

Amid this turbulence, leading altcoins Solana (SOL) and Cardano (ADA) have also faced substantial corrections, shedding average 10% of their value.

Source: Coinmarketcap

Despite the declines, both tokens are trading at critical support levels, hinting at the possibility of a rebound.

Solana (SOL)

On the 4-hour chart, $SOL is forming a descending triangle pattern. The recent rejection from the descending resistance at $256, along with a breakdown of the 50SMA, has brought SOL to its key support zone between $220 and $229. Currently trading at $225, SOL is holding above the 125SMA, which coincides with the support zone.

Solana (SOL) 4H Chart/Coinsprobe (Source: Tradingview)

This confluence of support indicates that SOL could potentially bounce back towards the descending resistance, provided the 125SMA continues to hold.

MACD Analysis: The MACD is showing bearish momentum, with the signal line crossing below the MACD line. However, a potential shift towards recovery may occur if SOL consolidates above the current support.

Cardano (ADA)

Similarly, $ADA is exhibiting a descending triangle pattern on its daily chart. After being rejected at $0.99 and breaking below its 50SMA, ADA has reached a key support zone around $0.8550. It is currently trading at $0.88 after demonstrating resilience at this level.