Even with today’s correction, Bitcoin is still in an uptrend, but most major altcoins have lost momentum and may remain range-bound for the next few days.
MicroStrategy CEO Michael Saylor recently tweeted that he purchased another 29,646 Bitcoin (BTC) at an average price of $29,646. With this purchase, the company has deployed the $650 million raised through a recent convertible debt offering. The business intelligence firm now holds 70,470 Bitcoin and that makes it the fifth-largest individual holder of Bitcoin.
The current Bitcoin bull run has largely been driven by institutional investors. Analysts at JPMorgan Chase believe that in order for the uptrend to continue, fresh institutional money needs to keep trickling in as it has done in the past few weeks, or Bitcoin could witness a correction.
Every bull phase witnesses several sharp corrections and Bitcoin’s current bull run is likely to be no exception. However, when the main trend is up, investors view dips as a buying opportunity as it allows a low-risk entry point. Therefore, if Bitcoin corrects, several new investors are likely to show interest until its uptrend remains intact.
One such hint can be seen from the conversation between Saylor and Tesla CEO Elon Musk. Saylor suggested Tesla convert its balance sheet from U.S. dollars to Bitcoin. Musk did not reject the idea but asked whether such a large transaction was possible.
As a response, Saylor said that he was willing to share his playbook with Musk so he could see how it is done. If a popular company such as Tesla adopts Bitcoin, it could lead to a rush from several other firms.
Let’s look at the charts of the top-10 cryptocurrencies to spot the critical levels on the upside and the downside.
The bulls pushed Bitcoin above $24,000 on Dec. 19 and Dec. 20, but on each of these days, the buyers could not sustain the higher levels. This shows that bears are mounting a stiff resistance in the $24,000 to $25,000 zone.
Typically, momentum traders dump their positions when they find that the rally has stalled. That seems to have happened today, which pulled the price down to $21,934.83. However, the long tail on today’s candlestick shows that investors are aggressively buying on dips.
Today’s fall has eased the overbought levels on the relative strength index (RSI), which is a positive sign. This means the bulls are likely to try and resume the uptrend. If they succeed, a rally to $26,958 is possible.
However, if the price again turns down from the overhead resistance zone, the BTC/USD pair may remain range-bound for a few days. The pair remains in a strong uptrend as long as the price sustains above the critical $20,000 support.
A break and close below this support will be the first indication that demand is drying up at higher levels and that the sentiment may be shifting from buying on dips to selling on rallies. Below $20,000, the pair may drop to the 50-day simple moving average ($18,136).
Ether (ETH) could not pick up momentum after breaking above the ascending triangle pattern on Dec. 16. The failure to resume the uptrend could have attracted profit booking from short-term traders, which has pulled the price back below the breakout level at $622.807 today.
However, the bulls are currently attempting to defend the 20-day exponential moving average ($599). If they succeed, the ETH/USD pair will attempt to resume the uptrend. A break above $676.325 may bring the pattern target of $763.614 back into play.
The 20-day EMA is flattening out and the RSI is just above 54, which suggests that the up-move is losing momentum. If the bears defend the $660 to $676.325 resistance zone, the pair could enter a consolidation for a few days.
Contrary to this assumption, if the price slips below the 20-day EMA and the trendline of the ascending triangle, the advantage could shift in favor of the bears.