A large part of the current crypto bull run has been driven by institutional demand. But for the first time, the institutions may be stepping back. According to CryptoQuant, the Coinbase Premium Index — the difference in Bitcoin’s (BTC) price on Coinbase Pro and Binance — has turned negative, which suggests that pro traders may be taking profits.
The institutional selling needs to be monitored closely because roughly 3% of the Bitcoin in circulation is held by these investors. If they start to dump their positions, that could result in an exodus by other traders, leading to a sharp pullback.
In the past 24 hours, about $1.89 billion worth of crypto futures positions has been liquidated on various exchanges. However, most liquidations have happened on Binance, considered to be dominated by retail, while Bitfinex has seen the least. This prompted Bitfinex chief technology officer Paolo Ardoino to suggest that Bitfinex traders “use leverage slightly more carefully."
One of the main reasons for the sharp fall in altcoins could be attributed to the sharp rise in funding rates on Binance Futures, which surged to 0.3% to 0.7% from the average of 0.01%, which shows rampant speculation by novice traders.
However, after the shakeout, have the altcoins changed direction? Let’s analyze the charts of the top 10 cryptocurrencies to find out.
BTC/USD
Bitcoin's (BTC) price rallied to $49,689 on Feb. 14, just missing the psychologically important level of $50,000 by a whisker. Although the bears tried to start a correction today, the long tail on the day’s candlestick suggests the bulls are in no mood to relent.
A shallow correction that could not even reach the breakout level at $41,959.63 indicates strength. The upsloping moving averages and the relative strength index (RSI) in the overbought zone suggest that bulls are in control.
If the bulls can sustain the buying pressure and push the price above $50,000, the BTC/USD pair may witness a short squeeze that could quickly propel the price to $60,974.43.
Contrary to this assumption, if the price again gets rejected near the $50,000 level, it will suggest that the bears are aggressively defending this resistance.
That could attract profit-booking from short-term traders, resulting in a fall to $44,000 and then to the 20-day exponential moving average ($41,975). A bounce off this support will suggest that the sentiment remains positive.
But if the bears sink the price below the 20-day EMA, the pair may drop to the 50-day simple moving average ($36,502). A break below this critical support may signal a possible change in trend.
ETH/USD
Ether (ETH) has been consolidating between $1,680.173 and $1,835.554 for the past few days. The bulls pushed the price above $1,835.554 consecutively over the past three days but could not sustain the breakout, which suggests that demand dries up at higher levels.
As the bulls failed to achieve a breakout, the bears tried to start a correction today. The ETH/USD pair dipped below $1,680.173, but the bulls aggressively bought the decline, resulting in a sharp rebound, as seen from the long tail on today’s candlestick.
If the bulls can now thrust the price above the $1,835.554 to $1,869.473 resistance zone, the pair may rally to the resistance line of the ascending channel at $2,000. This is a psychologically critical level where the bears may again mount stiff resistance.
The upsloping moving averages and the RSI near the overbought zone suggest that bulls are in command. This positive view will invalidate if the price again turns down from the overhead resistance and plummets below the 20-day EMA ($1,631).
ADA/USD
Cardano's ADA fell to the 20-day EMA ($0.66) today, but the bulls purchased this dip, which shows that sentiment remains bullish. The buyers will now try to push the price above the $0.9817712 resistance.
If they succeed, the ADA/USD pair may resume its uptrend, with the next target objective at $1.25 and then $1.50.
Contrary to this assumption, if the price turns down from the overhead resistance, the pair may consolidate in a large range between $0.981 and $0.687 for a few days.
This positive view will be negated if the bears sink and sustain the price below the 20-day EMA. Such a move will suggest that supply exceeds demand and will signal a possible change in trend.
XRP/USD
XRP price turned down from the overhead resistance at $0.65 on Feb. 14 and plummeted to the breakout level at $0.50. The retest was successful, as the altcoin bounced back sharply and has formed a long tail on the day’s candlestick.
If the bulls can push the price above $0.65, the XRP/USD pair could rally to $0.78068. The bears are likely to defend this level aggressively, but if the bulls can propel the price above the resistance, the pair may rally to $1.
On the other hand, if the price turns down from $0.65 once again, the pair may fall to $0.50 and then remain range-bound between these two levels for a few more days. A break below the 20-day EMA ($0.47) will be the first indication of a deeper correction to $0.3855.
DOT/USD
Polkadot's DOT turned down from the resistance line of the ascending channel on Feb. 13 and dipped to the 20-day EMA ($22.37) today. However, the sharp rebound from the 20-day EMA suggests strong demand at lower levels.
The DOT/USD pair may now again move up to the resistance line of the ascending channel. If the price breaks above the channel, the DOT/USD pair could pick up momentum and rally to $41.
However, if the bears defend the resistance line of the channel, the pair may gradually continue to move up. The trend will turn in favor of the bears if they can sink and sustain the price below the support line of the channel.
BNB/USD
Binance Coin (BNB) has been range-bound between $117.7289 and $141.32 for the past few days. A consolidation after a sharp uptrend is a positive sign, as it shows that traders are not hurrying to close their positions.
If the bulls can push the price above the $141.32 to $148.40 overhead resistance, the BNB/USD pair could resume the uptrend. The pair could then rally to the psychological resistance at $200.
Conversely, if the bears sink the price below the $117.7289 support, the pair could drop to the 38.2% Fibonacci retracement level at $105.7886. If this support also cracks, the decline may extend to the 20-day EMA ($92).
LTC/USD
Litecoin (LTC) broke out and held above the $185.5831 resistance on Feb. 12. This resumed the uptrend, and the bulls easily pushed the price above the psychological barrier of $200 on Feb. 13.
The LTC/USD pair turned down from $230.5305 on Feb. 14 and dropped to the breakout level at $185.5821 today. The long tail on the day’s candlestick suggests the retest of the breakout level was successful.
If the bulls can now thrust the price above $230.5305, the uptrend could extend to the next target at $256 and then $272.
Contrary to this assumption, if the price turns down from the current levels or the overhead resistance, then it may drop to $185.5821 and consolidate for a few days. The first sign of weakness will be a break below the 20-day EMA ($174).
BCH/USD
Bitcoin Cash (BCH) broke above the $631.71 resistance on Feb. 13 and rose to $750 on Feb. 14. The bears pulled the price below $631.71 today, but the bulls bought the dips aggressively.
The buyers have sustained the momentum and pushed the price to a new 52-week high at $773.32. The next target objective on the upside is $900.
However, if the bulls fail to sustain the price above $750, the BCH/USD pair may again turn down to $631.71 and remain range-bound for a few days.
A break below $631.71 will indicate weakness and may result in a fall to $539. Such a move could delay the start of the next leg of the up-move.
LINK/USD
Chainlink's LINK broke above the resistance line of the rising wedge pattern on Feb. 13. This is a positive sign, as it invalidated the bearish setup. The bulls had pulled the price back into the wedge today, but the long tail on the day’s candlestick suggests the bulls aggressively bought the drop to the 20-day EMA ($27).
If the bulls can sustain the price above the wedge, it will indicate strength. A break above $35.6945 could resume the uptrend, with the next target objective at $41.
On the contrary, if the bears sink the price back into the wedge, it may catch several aggressive bulls off guard. That may pull the price down to the support line of the wedge. A break below this support could signal a trend change.
XLM/USD
Stellar's Lumen (XLM) corrected sharply today, but the long tail on the candlestick shows the bulls aggressively purchased the dip to the 20-day EMA ($0.409). In an uptrend, a strong rebound off the 20-day EMA suggests the bulls are accumulating on dips.
If the buyers can propel the price above the $0.600681 resistance, the XLM/USD pair may resume its uptrend. The next target on the upside is $0.79.
Contrary to this assumption, if the bulls fail to sustain the price above $0.50, the pair may again slide down to the 20-day EMA ($0.40). A break below this support could result in a fall to $0.35.
A deep correction in an uptrend usually indicates a loss of momentum. If that happens, the price may remain range-bound for a few days before starting the next trending move.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Market data is provided by HitBTC.