Navigating the Crypto Correction: Strategic Entry Points in BTC, ETH, and Altcoins Below Key Support Levels

The cryptocurrency market in August 2025 is at a pivotal inflection point. Bitcoin’s dominance has fallen below 60% for the first time since 2021, signaling a structural shift toward Ethereum and altcoins [1]. This reallocation of capital is driven by Ethereum’s institutional adoption—$3 billion in U.S. spot ETF inflows—and its role as a bridge to DeFi and Layer-2 innovations [1]. However, the market remains in a consolidation phase, with critical support and resistance levels determining the next phase of the bull run. For investors, the challenge lies in identifying assets poised for rebounds while avoiding those at risk of deeper corrections.

Bitcoin: A Test of $105K and the 200-Day EMA

Bitcoin’s recent pullback below $110K has reignited debates about its near-term trajectory. The 200-day EMA at $103,995 has emerged as a critical psychological floor, with a failure to hold this level potentially triggering a test of $100K [3]. Technical indicators suggest a bearish bias: Bitcoin’s RSI on the 4-hour chart sits at 35, reflecting persistent downward momentum [1]. However, institutional ETF inflows and whale accumulation hint at a potential rebound. Traders should monitor the 200-day EMA as a dynamic support line and consider small long positions if Bitcoin closes above $105K with increasing volume. Historically, Bitcoin’s performance after touching support levels has shown mixed signals: a 30-day average return of ~2.6% post-support events (vs. ~3.7% for the benchmark) and a win rate that drifts from ~50% to ~56.5% over 30 days, though statistical significance remains low [1].

Ethereum: A Structural Reset at $4,100–$4,300

Ethereum’s price action is more nuanced. After testing $4,200–$4,300—a level that aligns with previous resistance from 2022 and 2024—the token faces a critical decision point [5]. A breakout above $4,700–$4,900 could see Ethereum retest all-time highs, supported by bullish RSI divergence and favorable MVRV ratios [1]. Conversely, a failure to hold $4,300 may lead to a deeper correction toward $3,491.32, the 38.2% Fibonacci retracement level [2]. Institutional demand, however, could absorb the $5 billion validator exit queue, mitigating selling pressure [6]. For risk-managed entry, investors might consider dollar-cost averaging into Ethereum below $4,300, with a 5–10% stop-loss threshold. Historical data on Ethereum’s support-level interactions reveals a 30-day average return of ~2.5% post-event (vs. ~2.6% for the benchmark), with a win rate peaking at ~53% mid-window but declining to ~46% by Day 30, suggesting a fading edge [1].

Altcoins: Breakouts and Breakdowns in a Fragmented Market

Altcoins are diverging sharply. Cardano (ADA) and Hedera (HBAR) show breakout potential, with ADA’s staking activity and bullish chart patterns suggesting 120–140% upside [1]. HBAR , having flipped the 0.786 Fibonacci level from resistance to support, is consolidating around $0.26, with a key resistance at $0.29 [4]. Solana (SOL), meanwhile, is nearing the top of its short-term upward channel above $200, offering a high-risk, high-reward trade [4]. However, smaller altcoins face deeper risks. Tokens lacking strong fundamentals or liquidity may collapse if Ethereum’s dominance wanes, as seen in the $297 million in Ethereum liquidations during the August selloff [6].

Risk-Managed Positioning: Balancing Bulls and Bears

For bulls, the key is to allocate conservatively. A 5–10% portfolio allocation to undervalued altcoins with strong fundamentals—such as ADA or HBAR—can capture multi-year gains while limiting exposure to volatile tokens [5]. Position sizing should follow the formula: Position Size = (Account Size × Risk%) ÷ Stop Distance, ensuring no single trade risks more than 1–2% of capital [1]. For bears, shorting Bitcoin or Ethereum below key support levels (e.g., $103,995 for BTC, $4,100 for ETH) could capitalize on the correction, but leverage should be limited to 3x–5x to avoid liquidation risks [6].

Conclusion: A Market at a Crossroads

The August 2025 correction is not a bear market but a structural reallocation. Ethereum’s leadership and altcoin momentum suggest a prolonged “Ethereum season,” but volatility remains high. Investors must balance technical signals—RSI divergence, Fibonacci levels, and volume profiles—with risk management frameworks. For those willing to navigate the turbulence, the current pullback offers strategic entry points in Ethereum and select altcoins, provided positions are sized and hedged appropriately.

Source:
[1] Altcoin Breakouts: Technical Signals and Correlation Shifts
[2] Crypto ABC Correction: 5-Wave Rally May Be Over for Ethereum
[3] Bitcoin (BTC) Price Prediction: Bitcoin Dips Below $110K
[4] Identifying Undervalued Innovators in a Bitcoin-Dominated Market
[5] Altcoin Market at Critical Cycle Bottom: Strategic Entry Points
[6] $840M Liquidated In Crypto Selloff