Traders are buying every dip and pushing Bitcoin price to new highs on a daily basis, triggering many altcoins to follow suit.
Bitcoin (BTC) again rose to a new all-time high on Friday as bulls continued to buy on every minor dip. As the price reached a new high, Bitcoin’s market capitalization soared above $775 billion, taking it past Facebook’s market cap, according to the website Companies Market Cap. This means, there are only six companies in the world that currently have a greater market cap than Bitcoin.
The pace of the rally seems to have caught several traders off guard. Popular analyst flibflib told Cointelegraph that the sustained rise points to “accumulation algorithms and that accumulation algorithms seldom care about the price when their goal is to invest X$ in Y time period.”
The bull market has attracted huge trading activity that has smashed all previous volume records. Along with the spot markets, Bitcoin futures trading volume has also surged, hitting over $97 billion in a 24-hour period, according to data from Skew.
Traders must keep in mind that when the market reverses course, there will be a lot of selling to deal with and that could result in a sharp correction. On the way to new all-time highs, the market did not stop at resistance levels and during the fall, these same support levels may prove useless. Therefore, traders must follow their money management principles and not be blinded by greed.
Let’s study the charts of the top-10 cryptocurrencies to spot any topping patterns or levels where the markets may reverse direction.
The long tail on today’s candlestick suggests that bears tried to start a pullback but the bulls thwarted their attempt and purchased the intraday dip. The trend has been so strong that there hasn’t been a consecutive three-day correction since Dec. 12.
The vertical rally of the past few days has pushed the relative strength index (RSI) deep into the overbought territory but that has not lowered the demand from the bulls.
The BTC/USD pair could next rally to $45,000 and if that resistance is scaled, the uptrend could extend to $50,000. This psychological level could offer stiff resistance and that may result in a correction.
On the downside, the first support is the 20-day exponential moving average ($30,539). A strong rebound off this support will keep the uptrend intact.
Conversely, if the bears sink the price below the 20-day EMA, the decline could deepen with the next support at the 50-day simple moving average near $23,218.
Ether (ETH) made a long-legged Doji candlestick on Jan. 7, indicating indecision among the bulls and the bears about the next directional move. That uncertainty resolved to the downside today and the bears pulled the price down to $1,063.322.
However, the bulls aggressively purchased the dip resulting in the formation of the long tail on the day’s candlestick.
If the bulls can push the price above $1,288.668, the ETH/USD pair could rally to $1,420. The bears may try to pose a stiff challenge at this level but if crossed, the momentum could pick up and the pair could rise to $2,000.
Conversely, if the price turns down from the current levels and plummets below $1,063.322, the pair may drop to the 20-day EMA ($886).