Altcoins are beginning to lose bullish momentum as Bitcoin price struggles to reclaim $40,000.
Investors are beginning to worry that Bitcoin’s (BTC) uptrend could be in peril after the top-ranked cryptocurrency failed to pull above the $40,000. Some traders are afraid that a repeat of the crushing 2018 bear market is on the cards again if BTC fails to find bullish momentum.
However, a study of both the bull markets shows distinct differences that are noteworthy. Research from Pantera Capital found that after the current bull move, 86% of the crypto market’s value is concentrated in Bitcoin and Ethereum, largely because institutional funds have flowed into each cryptocurrency.
In 2017, the top two coins only held about 52% of the value, with the rest being held in several altcoins that turned out to be “non-functioning” coins. In the current bull market, retail investors seem to be largely absent so the type of speculation witnessed in 2017 has yet to appear in 2021.
Guggenheim Partners’ chief investment officer Scott Minerd recently said that his long-term Bitcoin price target of $400,000 remains and his recent tweet asking his followers to “take some money off the table” was based on the short-term price movement.
Although Minerd has not included Bitcoin in his mutual fund portfolios, he said purchases have been done in some private funds managed by Guggenheim.
While Bitcoin consolidates after the recent bull phase, select altcoins are extending their up-move. Can this continue? Let’s analyze the charts of the top-10 cryptocurrencies to find out.
Bitcoin is attempting to rebound off the 20-day exponential moving average ($34,380) but the weak bounce suggests a lack of urgency among bulls to accumulate on dips. As the price is stuck inside a symmetrical triangle, technical traders may wait for the price to break out of the pattern before buying.
If the price does not rise to the resistance line of the symmetrical triangle, the bears may smell an opportunity and will try to sink the price below the triangle. If they succeed, the BTC/USD pair may drop to the 38.2% Fibonacci retracement level at $29,688.10.
This is an important level to watch out for because, if the bears sink the price below this support, the drop could extend to the 50-day simple moving average ($26,932). The deeper the fall, the longer it is likely to take for the uptrend to resume because every rise will be met with a wave of selling by traders who are stuck at higher levels.
Another sharp correction could be avoided if bulls thrust the price above the triangle. The all-time high at $41,959.63 may act as a stiff resistance but if the bulls can drive the price above it, the pair could reach $50,000.
Ether (ETH) remains in a strong uptrend and is currently consolidating near the $1,300 to $1,349.10 overhead resistance. The upsloping moving averages and the relative strength index (RSI) near the overbought zone suggest the path of least resistance is to the upside.
The ETH/USD pair formed a Doji candlestick pattern on Jan. 17 and again today, indicating indecision between the bulls and the bears. If the uncertainty resolves to the upside and the bulls push the price above the overhead resistance, the uptrend could resume. The next target is $1,420 and then $1,675.
On the contrary, if the price turns down from the current levels and breaks below $1,152, the pair could drop to the 20-day EMA ($1,079). A strong rebound off this support will suggest accumulation at lower levels and the bulls will again try to resume the uptrend.
However, if the bears sink the price below the 20-day EMA, the decline could deepen to $1,000 and then to $900.