Bitcoin price has rebounded above a key trendline but resistance at higher levels may limit the recovery in altcoins.
Aggressive profit-booking sent Bitcoin (BTC) spiraling below $29,000 on Jan. 21 but was this a sign that institutional investors dumped their positions? This is one of the main questions bothering traders because large institutional inflows primarily led the run-up to $42,000.
Cointelegraph contributor Marcel Pechman analyzed derivatives data from various exchanges, which showed professional traders might have purchased at lower levels. The fall seems to have particularly hurt the excessively leveraged traders, resulting in $460 million worth of liquidations at derivatives exchanges.
Data from CryptoQuant shows that Bitcoin’s biggest mining pool, F2Pool, witnessed daily outflows of 10,000 Bitcoin for three days in a row, starting Jan. 17.
Although the outflows do not mean the miner has dumped the entire quantity, it shows a possible intent to reduce a portion of the inventory. This could have attracted selling from traders, fearing a sharp fall if the miners flooded the open market with BTC.
Currently, Bitcoin is rallying back toward $34,000 but is the current rebound a dead cat bounce or a resumption of the uptrend?
Let’s study the charts of the top-10 cryptocurrencies to find out.
Bitcoin held the 20-day exponential moving average ($34,146) on Jan. 20, but the bulls could not push the price back into the symmetrical triangle, which shows a lack of demand at higher levels. The bears renewed their selling on Jan. 21 and broke the 20-day EMA support decisively. This is the first indication that the bullish momentum has weakened.
The BTC/USD pair has bounced off the 50-day simple moving average ($28,103) today, but the rise could face resistance at the 20-day EMA. If the pair turns down from the 20-day EMA, it will suggest the sentiment has changed from buy on dips to sell on rallies.
If the next dip breaks below the 50-day SMA, the correction could deepen to the 61.8% Fibonacci retracement level at $22,106.73. Such a move may delay the resumption of the uptrend.
Contrary to this assumption, if the bulls can propel the price above the 20-day EMA, the pair could rise to the downtrend line. A breakout of this resistance could result in a retest of the all-time high at $41,959.63.
Ether (ETH) plummeted below the $1,300 support and the 20-day EMA ($1,142) on Jan. 21, but the bulls defended the uptrend line today. The buyers are currently attempting to drive the price above the $1,300 resistance.
If they succeed, the ETH/USD pair could retest the all-time high at $1,438. A breakout and close above this resistance will suggest the uptrend has resumed. The next target objective on the upside is $1,675.
However, if the price turns down from the overhead resistance, the pair could consolidate in a range for a few days before starting the next trending move. The bears will be back in the game if the pair turns down and breaks below the uptrend line.