Altcoins rallied strongly over the past week, but Bitcoin’s current consolidation could be an indication that the trend may reverse soon.
In a recent interview with Bloomberg, Grayscale CEO Michael Sonnenshein said that in addition to hedge funds, pension funds and endowments had also started investing in the Grayscale family of products. This only indicates that a wide range of institutions are accumulating Bitcoin (BTC).
As this trend is gathering its speed, many investment banks are also making moves to not get left behind. A recent documentation filing made by Morgan Stanley shows that an acquisition of 10.9% stake is made in business intelligence firm MicroStrategy, this can be a move that was likely made in order to grab the attention in Bitcoin. With 70,470 Bitcoin in their possession, MicroStrategy has become a proxy play on Bitcoin.
A particular group of analysts suspect that the current interest and rising demand could also be coming from investors who have been shutting their gold positions and buying Bitcoin. On a query about the recent underperformance of gold, CNBC Mad Money show host Jim Cramer speculated that institutional money may be flowing into cryptocurrency.
While there have been positive reports about institutional purchases, traders should also keep an eye on monitoring the people who have been selling on the grounds because sooner or later at some point the rally will lose momentum and investors will look to book profits.
A group of few Analysts at Material Indicators suggest that mega whales may have booked profits on Jan 7, when Bitcoin hit $40,000 and further selling from whales could also be the reason for the price drop seen today. However, aggressive buying at lower levels resulted in a strong rebound.
But that has not stopped the whales from selling. Bitcoin whales in South Korea have been dumping their positions over the course of past few days, as seen from various $100 million deposits to exchanges. While the selling has not caused a massive rush to the exit, traders should be careful with their positions because even if a couple of large investors in the U.S. rush to the exit, it could result in a sharp fall.
On the off chance that Bitcoin revises pointedly, most altcoins are also likely to follow suit, however on the off chance that Bitcoin stays solid, these main 5 cryptocurrencies could outperform in the short term.
Bitcoin has been in a strong upswing for the past few weeks, but the rally has pushed the Relative Strength Index(RSI) into an overbought territory. While markets can remain overbought for a long time, with every rise, the risk of a sharp correction increases.
The first support on the downside is the intraday low made on Jan 8, at $36,518.73. If the price rebounds off this level, it only suggests that traders are not booking profits in a hurry and are buying on minor dips.
If the bulls propel the value above $41,959.63, the upswing could resume with the next targeted objective at $45,000 and then $50,000.
Nonetheless, if the bears sink the price below $36,518.73, the BTC/USD pair could drop to the 38.2% Fibonacci retracement level of the most recent leg of the up-move at $32,816.03.
This is a crucial support to monitor because if it cracks, several traders may start to panic and dump their positions, which might result in a more profound correction to the 61.8% retracement level at $27,167.10.
And if the bears sink the price below the support of the range, it only suggest profit-booking by traders.
The next support on the downside is the 50-simple moving average, which has not been breached decisively during previous corrections in this leg of the uptrend.
Cardano (ADA) is as of now solidifying in an uptrend. The altcoin has been stuck somewhere in the range of $0.2632811 and $0.3542857 for as long as a couple of days, which has pulled down the RSI from profoundly overbought levels.
The bulls are facing stiff resistance near the $0.34 level yet one sure sign is that there are no indications of panic selling yet. In the event that the bulls can drive the price over the overhead resistance, the next leg of the uptrend could resume.
The ADA/USD pair has an objective target at $0.449 yet the bears are probably going to mount a solid obstruction close to $0.40. Nonetheless, if the bulls can push the cost over the resistance levels, the pair could rally to the psychological level at $0.50.
This bullish view will be nullified if the pair turns down and breaks underneath the 20-day EMA ($0.234). Such a move will suggest that the upturn may have topped out.
On the off chance that they succeed, the pair may rally to $0.525. However, if the pair dips under the triangle, the next support is at the 50-SMA, but if this support also cracks, the decline could extend to $0.20.
EOS has been exchanging inside an enormous reach somewhere in the range of $2.20 and $3.949. The altcoin turned down sharply from the overhead resistance today, which shows forceful selling by the bears.
However, if the bulls defend the moving averages, the EOS/USD pair may again attempt to rise to the overhead resistance near $3.949. A breakout of this level will recommend the beginning of another upswing that may reach $5.698.
This view will be nullified if the bears sink and support the cost beneath the moving midpoints. Such a move could result in a fall to the support of the range at $2.20 and that may keep the pair range-bound for a few more days.
However, if the price rebounds off the current level and rises above the 20-EMA, it will suggest that the selling may be over. The bulls may of course attempt to convey the cost to the overhead resistance.
On the other hand, if the bears support the cost underneath $3, the pair may drop to $2.50 and afterward to $2.20.
THETA/USD THETA is currently consolidating in an uptrend for the past few days. The cost has been making lower highs, which proposes that each endeavor to revitalize is being met with selling from the bears.
In any case, a minor positive is that the bulls have not permitted the cost to plunge underneath the $1.7611 uphold. The 20-day EMA ($1.74) is simply underneath this level and the bulls are likely to defend it aggressively.
On the off chance that the bulls can push the cost above $2.20, the THETA/USD pair may ascend to $2.51. The upsloping moving midpoints and the RSI in the positive territory suggest bulls are in control.
On the off chance that the bears proceed with their selling and sink the pair underneath the 20-day EMA, it might pave the way for a drop to the 50-day SMA ($1.12).
In the event that the bears can sink and support the cost below $1.7611, the plunging triangle pattern will finish and that could drag the value down to $1.01.
Then again, if the bulls can push the cost over the triangle, it will nullify the bearish pattern. This could push the price to $2.51 and if the bulls can thrust the price above this resistance, the up-move could reach $2.95.
AAVE is currently in an uptrend as it continues to make higher highs and higher lows formation. In any case, the long wick on the present candlestick shows that bears are aggressively selling at higher levels.
The upsloping moving averages and the RSI near overbought territory suggest the path of least resistance is to the upside. In the event that the AAVE/USD pair remedies further, a bounce back off the 20-day EMA ($99.93) will affirm that traders are continuing to buy on dips.
In the event that the buyer can push the price above $135.99, the uptrend could continue with the next likely target at $150.
However, if the bears sink the price below the 20-day EMA, the pair could drop to the 50-day SMA ($85). A break below this support could result in a fall to $70 and then to $60.
A break over the channel could bring about a sharp up-move however on the off chance that the value diverts down from the resistance line of the channel, the pair may trade inside the channel for a couple of days.
On the off chance that the value breaks below the 20-EMA, a drop to the support line of the channel is possible. A strong rebound off this support will keep the uptrend intact however a break below it could signal a trend change.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk, you should conduct your own research when making a decision.