Bitcoin vertical surge uncertainty and why not to watch only $30K level

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Bitcoin
(BTC) had a huge 2020 as the BTC price rose by 311 per cent. In the shadows of Bitcoin, Ether (ETH) also saw a wonderful year in which Ether’s price was even higher by 475 per cent. While just five days into the new year, ETH is upholding this pattern.

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Bitcoin vs. Ether January 2021 performance. Source: Digital Assets Data

Bitcoin hitting fresh all-time highs over $30,000 sparked a huge rally fire that is now boiling over to altcoins. The concern now, though, is whether the bull’s run will proceed sideways, as it has done in the last few months, or whether a short-term reversal should be expected.

Such a correction will open the door for most cryptocurrencies to accompany Bitcoin to their respective all-time peaks.

Bitcoin must sustain the 21-week MA

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BTC/USD 1-week chart. Source: TradingView

There are not many metrics to track for the continuation of this bull market, since only a handful give you good enough reasons for the bull/bear scenario.

But a valuable metric is the 21-week moving average (MA). This MA acted as a boost during the previous bull run, suggesting a progression to a strong $20,000 mark.

As long as Bitcoin sits on this MA, the BTC/USD pair is likely to survive. The 21-eek MA is currently holding support at the $16,000 mark.

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However, corrections are typical to consolidations that may take place during the next few weeks. The 21-week MA is going to creep up during those weeks. Combining the potential forecast of the 21-week MA with the previous all-time peak, however, gives the final bottom for a $20,000 area correction.

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BTC/USD 1-week chart. Source: TradingView

If Bitcoin has topped up right now is up for discussion, as many bullish signs are still blinking. This buoyant price behaviour is paired with a steady outflow from exchanges, a buoyant indicator for the market. I’m inclined to keep this bitcoin for the longer term, which makes this bull cycle somewhat different from the bull run of 2017.

Using the Fibonacci extension tools, the continuation of the present rally places the next level of interest at 1,618 and 2,618 Fibonacci stages, where the next significant corrections could be produced. These levels are respectively $50,000 and $76,000.

However, it won’t come as a surprise if Bitcoin is running for $76,000 this year, considering its recent strength.

Total crypto market cap breaking new highs

Total cryptocurrency market capitalization 1-week chart. Source: TradingView

Total market capitalisation is now producing fresh all-time highs, as Bitcoin and Ether have done enormously in recent weeks. The altcoin market cap lagged heavily, as Bitcoin always pulls forwards. But after Bitcoin stabilises, many other cryptocurrencies appear to follow suit with sharp rallying.

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This is because of how capital flows into the markets. Second, being in the spotlight, bitcoin draws financial flows. Then, when investors pursue still higher risk/higher reward options, capital transfers to big caps, mid-caps, and so on.

However, in the case of restructuring, the thresholds to be tracked for the overall market cap are seen in the chart: the latest all-time peak is around $700 billion (which may have already been tested) and the region is around $550 billion.

What are the levels to watch on lower time frames?

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BTC/USD 1-hour chart. Source: TradingView

The hourly chart for Bitcoin reveals a small decline since the recent high $34,800 mark. The $32,400-$32,800 region has flipped opposition, which is always a bearish warning.

However, the $30,000 barrier has only acted as help three times. This is thus a critical field that must be sustained so as to justify more upward momentum. If this level breaks down as funding, a decline from $27,000 to $27,500 is possible.

If it stays, it is likely to continue into the vital breaker on the upside. In this way, a $32,300 to $32,800 breakthrough will warrant a fresh test at an all-time high area and a potential continuation to $38,000 and even $42,000.

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-cryptomichnl

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