On Monday morning, the crypto industry was a sea of red as the weekend’s rebound failed. Meme coins like Brett, Pepe, and Dogwifhat (WIF) led these losses, plunging by more than 15% in the past 24 hours. Other tokens like Ondo Finance, Ethena, Stacks, and Immutable X were also among the biggest losers.
Crypto price movements
Why these tokens rebounded on Saturday
Cryptocurrencies like Brett, Pepe, WIF, and Ondo Finance have had volatile periods in the past few days. On Friday, they all dived to their multi-month lows as Bitcoin dropped below the crucial support at $54,000 for the first time since March.
Then, they all soared by double-digits on Saturday and have now erased those gains and moved to their multi-month lows.
This is a common price action in the financial market, known as a dead cat bounce. A dead cat bounce is when an asset in a freefall briefly bounces back as some traders buy the dip and then resume the downward trend.
In this case, this dead cat bounce happened as Bitcoin rebounded from last week’s low of $53,400 to over $57,000 on Saturday. These dead cat bounce movements are usually brief, resulting in more bearish movements.
Therefore, there is a high possibility that tokens like WIF, Ondo Finance, Pepe, and Brett prices will continue the downtrend for a while.
Bitcoin price to drive this sell-off
Bitcoin’s recent decline from its high of $72,000 last month to around $55,000 today is expected to drive down the value of other cryptocurrencies as well. Bitcoin is facing several challenges, which is why it’s likely to continue dropping in the short term.
Firstly, technically speaking, Bitcoin has formed a significant double-top pattern, indicating that it could decline further to $44,000. Over the weekend, the coin formed a break-and-retest pattern by reaching the neckline level of this pattern, which is an important signal of continuation.
Similarly, Bitcoin’s fundamentals are not strong, as the number of coins in exchanges has increased in recent weeks. This rebound came as a result of Bitcoin miner capitulation and indications that the German government and US security agencies are planning to sell their Bitcoin holdings.
There hasn’t also been any significant positive news for Bitcoin recently. Although spot Bitcoin ETFs saw significant inflows on Friday, the overall trend has not been favorable.
Therefore, if Bitcoin’s downtrend intensifies, these altcoins will likely continue to fall in the coming weeks.
