What important support levels do bulls need to hold to kick-start the next rally in BTC and altcoins?

The U.S. stock market is struggling to recover amid reports that debt ceiling negotiations show promise and a debt default could be avoided. However, the same enthusiasm is not seen in the cryptocurrency market. Bitcoin fell back below the $27,000 support level on May 17, indicating that buyers are struggling to sustain the relief rally.

Institutional investors appear to be locking in profits amid macro uncertainty. CoinShares’ Digital Asset Flows Report shows that digital asset investment products have seen a total outflow of $200 million over the past four weeks.

While the short-term picture remains negative, Bitcoin’s chart structure has not been broken. Bitcoin has corrected about 15% from the local high of $31,000 set on April 14, but remains above $25,000, suggesting that the weakness looks like a corrective phase of the bull run.

What important support levels do bulls need to hold to kick-start the next rally in Bitcoin and altcoins? Let’s study the charts of BTC and ETH to find out.

Bitcoin Price Analysis

On May 15, Bitcoin’s recovery stalled at the 20-day exponential moving average (EMA) at $27,694, indicating that sentiment remains negative and bears are selling on rallies.

The bears will try to sink the price below the immediate support at $26,500, which could open the doors for a drop to $25,250. This remains a critical level to watch as a break below it could accelerate the sell-off. The BTC/USDT pair could then plummet to $20,000.

Conversely, if the price rebounds off $25,250, it will suggest that the bulls are attempting to defend the neckline of the inverted head and shoulders pattern. Starting a fresh rebound will be a tough task for the bulls as the recovery is likely to face selling again at the moving averages and the resistance line.

Ethereum Price Analysis

Ether turned down from the 20-day EMA ($1,844) on May 17, which shows that the bears are aggressively protecting this level.

The price action over the past few days has formed a falling wedge and the ETH/USDT pair could slide towards the support line. This is an important level to watch out for because if the bears sink the price below the wedge, the pair could drop to $1,600.

Alternatively, if the price rebounds off the support line, the bulls will again try to push the pair above the 20-day EMA. If they manage to do that, the pair is likely to move up to the resistance line of the wedge.

Well, after reading the above, I believe you already have the answer in your mind.