Bitcoin price continues to chase after $30,000 but continued rejections below the key level are negatively impacting altcoin prices.
On-chain data suggests that high-net-worth individuals continued to buy Bitcoin (BTC) after Christmas. Analysts at Santiment said that smaller traders sold about $647 million worth of Bitcoin and this sum may have been bought up by Bitcoin whales.
Data also signals that large investors have been buying and holding their purchases throughout 2020, without booking profits in an aggressive manner. According to Glassnode analysts, this has caused the number of Bitcoin in circulation to decline by about 1 million.
That means, out of the total available supply, 14.5 million Bitcoin are considered illiquid. Glassnode analysts say that this leaves only 4.2 million Bitcoin in constant circulation that are available for trading..
This could further increase the imbalance in the demand and supply equation boosting Bitcoin’s price higher.
However, every bull market goes through periodic corrections and Bitcoin may also be due for one. Therefore, traders should weigh the risks before buying at the current levels.
Let’s analyze the charts of the top-10 cryptocurrencies to find the altcoins that may join Bitcoin in the breakout.
Bitcoin had formed a gravestone Doji candlestick pattern on Dec. 27 but the bears could not pull the price down on Dec. 28. The bears again tried to start a correction on Dec. 29 but the hammer candlestick formation suggests strong buying on dips.
The bulls have pushed the BTC/USD pair to a new all-time high at $28,587.67 today. This suggests that the uptrend has resumed. The next level to watch on the upside is the psychological barrier at $30,000.
Although the rising moving averages suggest an advantage to the bulls, the relative strength index (RSI) has risen deep into overbought territory, which suggests that a correction could be around the corner.
Overbought levels at the start of a rally is a sign of accumulation, but after a mature rally, an RSI above 80 suggests buying due to FOMO and this usually leads to a correction. Therefore, traders should remain cautious and protect their paper profits with a suitable stop-loss.
A break below $25,800 could signal the start of a deeper correction to the 20-day exponential moving average ($23,836) and then to the 50-day simple moving average ($20,077).
Ether (ETH) formed an inside day long-legged Doji candlestick pattern on Dec. 29. This suggests that the bears tried to pull the price down but the bulls absorbed all the selling and staged a strong recovery by the end of the day.
The bulls are currently attempting to push the price above $750 but the Doji candlestick pattern suggests indecision among the bulls and the bears.
If this uncertainty resolves to the upside and the ETH/USD pair rises above $750, the uptrend could reach $800 where the bears may again mount a stiff resistance.
The upsloping moving averages and the RSI near the overbought territory suggest that bulls are in control.
However, if the bulls fail to drive the price above $750, the pair could attract profit booking by the short-term traders. If the bears sink the price below $$680, the pair could drop to the 20-day EMA ($645).
A strong rebound off the 20-day EMA will suggest that the sentiment remains bullish and traders are buying on dips. On the other hand, a break below the 20-day EMA may signal the start of a deeper correction.