31 Oct 2025
Bitcoin is playing out a massive bearish divergence on larger time frames, breaking back below a crucial level, while the US stock market's pullback from all-time highs signals a potential cool-off for the crypto market. Ethereum, Solana, XRP, and Chainlink are also rejecting from key resistance levels and retesting important support areas, indicating widespread bearish pressure and loss of bullish momentum across major altcoins.
The US stock market is pulling back from recent all-time highs, following a massive push in the previous trading day. Crypto and the stock market are highly correlated, with previous stock market flash crashes triggering similar liquidation events in crypto, and a current stock market cool-off potentially causing a pullback in crypto, especially in tech stocks like the NASDAQ 100 index (QQQ).
The weekly Bitcoin price chart shows the super trend indicator in green, suggesting a larger bull market, but also displays massive lower highs confirmed in the weekly Bitcoin RSI alongside higher highs in price candle closes throughout the year. This constitutes a massive bearish divergence, indicating a loss of bullish momentum and a likely larger cool-off, with choppy sideways price action or a pullback expected in the next few weeks or months.
Bitcoin has confirmed a daily candle close back below an important level, roughly between $110,000 to $111,000, which previously acted as support and resistance. This break below signifies weakness in the price structure, as it failed to hold this level as new support after a short-term bullish breakout, suggesting a lack of follow-through and a likely larger cool-off in line with the weekly time frame's bearish signals.
A previous bullish divergence on the 6-hour Bitcoin chart has played out as a short-term bullish relief from October 17th to 29th, but is now invalidated. Bitcoin perfectly rejected from strong resistance between $115.5K to $116,000 and has broken back below support at $111.6K to $112K, indicating a short-term bearish signal. Immediate support levels are around $107.5K and $105.5K, with a crucial level at $100,000 to $101,000 if lower supports fail. The 6-hour RSI is approaching oversold, suggesting a potential local low and bounce if reached.
A futures grid bot strategy is currently employed, automatically buying Bitcoin at lower prices and selling on bounces within a price range of $70,000 to $130,000, across 188 orders. This strategy profits from price fluctuations and bounces. A liquidation price of approximately $42,000 to $43,000 per Bitcoin is the point at which the strategy would incur a significant loss if a straight line drop occurs without bounces, though this is considered unlikely.
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Liquidity is present above $116,000, but a significant amount of liquidity is now building below Bitcoin's price, around $106,000 ($106.3K to $105.7K). This liquidity is potentially drawing the price lower, contributing to the current pullback.
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Bitcoin dominance on the daily time frame continues to show a bullish divergence, suggesting a likely slight bullish relief or choppy sideways price action for Bitcoin's market share relative to altcoins.
The daily Ethereum chart is close to invalidating a bullish divergence, which would be confirmed by a candle close below a previous low or a lower low in the RSI. This divergence previously resulted in choppy sideways price action over the last couple of weeks. On the 8-hour chart, Ethereum perfectly rejected from resistance at $4250 to $4280 and broke below support at $4060 to $4.1K, leading to a drop towards the next major support at $3720 to $3760. Holding this support is crucial; a break below could lead to a move towards $3,000.
Solana has perfectly rejected from resistance at $200 (within the $190-$200 range) on the 2-day time frame, failing to confirm a breakout. If the pullback continues, the next significant support is between $170 to $175, with further resistance at $209 to $210. On the 8-hour chart, Solana shows a relatively neutral price structure, with choppy sideways action, forming slight lower highs and higher lows.
XRP continues to play out a massive bearish divergence on the weekly time frame, initially warned about near all-time highs in late July/early August, leading to a major pullback. On the daily chart, a shorter-term bullish divergence previously resulted in a bullish relief but XRP perfectly rejected from resistance at $2.60 to $2.70. This rejection officially invalidates a previous inverse head and shoulders pattern, with the price now potentially heading towards retesting support at $2.30 to $2.40. Risk management, including taking partial profits near resistance and moving stop losses to entry or into profit, is emphasized for such trades.
Chainlink has basically invalidated a bullish divergence on the daily time frame, with a breakdown in the RSI and potential candle closes below previous lows. Although the divergence provided a slight bullish relief and choppy sideways action over the last 1-2 weeks, the larger trend remains bearish, characterized by lower highs and lower lows. If the bearish trend continues, next support levels are around $16.50 to $16.60, and $15.20 to $15.70. Resistance levels are at $17.30 to $17.50, and $19 to $20.
Remember, the larger time frames are more important than the smaller time frames.
| Market Signal | Condition | Implication | Market Condition | Bitcoin Daily Price | Bitcoin 6-Hour Resistance | Ethereum Resistance | XRP Resistance | Trading Strategy | Details | Benefit | General Market Principle | Principle | Impact |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Bitcoin Weekly RSI | Massive Bearish Divergence (Lower Highs in RSI, Higher Highs in Price) | Loss of bullish momentum, likely larger cool-off (choppy sideways or pullback for weeks/months). | |||||||||||
| Pulling back from all-time highs | Potential for a pullback in the highly correlated crypto market. | US Stock Market (NASDAQ 100) | |||||||||||
| Confirmed daily candle close below this key level | Sign of weakness, failure to hold support, likely continuation of larger cool-off. | Break below $110K-$111K | |||||||||||
| Perfectly rejected from this area | Strong resistance level, failed breakout attempt. | $115.5K - $116K | |||||||||||
| Perfectly rejected from this area | Strong resistance level, leading to a drop to next support. | $4250 - $4280 | |||||||||||
| Perfectly rejected from this area | Invalidated inverse head and shoulders pattern, likely retest of lower support. | $2.60 - $2.70 | |||||||||||
| Futures Grid Bot (Bitcoin) | Buys low, sells high within $70K-$130K range (188 orders) | Profits from bounces and sideways price action; liquidation at ~$42K-$43K. | |||||||||||
| Time Frame Importance | Larger time frames are more important than smaller time frames | Short-term moves (e.g., bullish divergences) can occur within longer-term trends (e.g., larger cool-offs). |
