Critical support for XRP is present at the 26 EMA, a level that has been holding the ground for the asset. The assets short-term trajectory will probably be determined by the ongoing battle at this price. A recovery could be possible if XRP is able to bounce there, which would indicate a reversal of the current downward trend. However, there may be serious bearish repercussions if the above is broken.

In line with the descending trendline of XRP, the 26 EMA is functioning as a dynamic support. A reversal is even more crucial because of this confluence which increases the pressure on the asset. Increased trading volume, combined with a successful move above the 26 EMA could push XRP back toward the $2.20 and $2.50 levels. Such a breakout might rekindle interest in buying and would probably give market participants more confidence. 

Conversely, there might be severe repercussions if XRP is unable to overcome this obstacle. The asset could test lower supports if it were rejected at this level which would probably confirm the current bearish trend. Following $1.79 which corresponds to the 100 EMA is $1.47 the first notable support level. 

XRP’s market structure would be severely weakened by a breakdown below these levels which might push the price closer to $1.07 its next significant support zone. The relatively low trading volume that has accompanied XRP’s recent movements is additionally concerning. 

Ethereum wakes up 

Ethereum has formed a higher low which is a strong short-term bullish signal and is displaying encouraging signs of recovery. This change implies that the market may be preparing for a period of recovery which could reverse the recent downward trend. The lack of substantial trading volume further supports the waning selling pressure highlighted by the higher lows formation.

Lower volume may at first glance seem alarming but it also means that bearish momentum is waning. Bulls may be able to regain control in the upcoming weeks as a result particularly if January sees new capital entering the market. The 50 EMA, a crucial indicator of short-term market trends, is one of the critical support levels that ETH is currently holding above. The asset may soon test the $3,544 resistance level if it keeps moving higher. 

Ethereum’s reputation would probably be restored if it broke above this level opening the door for a test of the $3,800 range. But the general downward trend of the market is still a cause for concern. A full-fledged recovery of Ethereum is still hampered by broader market sentiment. 

A rise in trading volume and increased buyer participation are necessary for ETH to keep up its upward trajectory. Ethereum may experience a turning point in January. Historically there has been a resurgence of interest in the cryptocurrency market at the beginning of the year. ETH might pave the way for a stronger recovery if it can maintain its current trajectory and stay above $3,000. 

Bitcoin is losing to USD

At levels that have greatly affected Bitcoin’s momentum the US Dollar Index (DXY) is still rising. Historically Bitcoin and DXY have had an inverse relationship: Bitcoin finds it difficult to maintain rallies when the dollar appreciates. As the DXY gains ground, this dynamic is reoccurring. Bitcoin has been under pressure to decline due to the recent recovery in DXY which is currently trading at about 108. 

Because of the Federal Reserve’s ongoing monetary tightening policies and strong economic data investors confidence in the US economy is reflected in the dollar’s strengthening. As a result demand for assets denominated in dollars has grown driving away from riskier options like Bitcoin. 

Because the dollar is getting stronger, Bitcoin’s most recent rally has stalled. Bitcoin has lost momentum after trying to break through the psychological barrier of $100,000 and is currently trading below important resistance levels. Since outflows from the cryptocurrency market are frequently caused by a strong dollar, the growth of the DXY has made it harder for Bitcoin to maintain buying interest. 

Bitcoin is seen as a hedge against the devaluation of fiat currencies which explains this inverse relationship. Investors turn to Bitcoin as a substitute store of value when the dollar declines. A rising DXY however lessens this allure and sends Bitcoin into a bear market. Future prospects for Bitcoin’s recovery depend on a possible reversal in DXY’s trajectory. In the event that the dollar index stabilizes or declines Bitcoin might gain ground and perhaps start to rise again.