The short-term gyrations in crypto and stock prices are usually based on sentiment and technicals, while the long-term trends generally follow stronger underlying fundamentals. Therefore, if the fundamentals do not weaken, smart investors view short sharp corrections as a buying opportunity.
Data suggests that large investors, oftentimes dubbed ‘whales’, have been accumulating Bitcoin (BTC) since March. Along with them, several new small traders have also been buying Bitcoin and this suggests that retail and high net worth traders believe that Bitcoin will work as a store of value during the next crisis.
Daily cryptocurrency market performance. Source: Coin360
Morgan Stanley’s head of emerging markets and chief global strategist Ruchir Sharma believes that inflation is likely to rear its head as early as next year, hence, alternative assets are in demand. Sharma said that about 5% of a portfolio could be in gold and the “more adventurous” investors could make allocations to “Bitcoin and other cryptocurrencies.”
While the long-term expectation for Bitcoin price is bullish, do the charts project that a bottom is in place or is another further fall likely in the next few days?
Let’s review the charts to find out.
BTC/USD
Bitcoin has been stuck in the $9,835–$10,625 range for the past few days, which suggests that both the bulls and the bears are playing it safe and are waiting for the next trending move to start before making large bets.
BTC/USD daily chart. Source: TradingView
The long tail on the candlesticks of the past five days shows that the bulls have been buying at lower levels but they have not been able to push the price above the top of the range at $10,625, which suggests that demand dries up at higher levels.
The downsloping 20-day exponential moving average ($10,902) and the relative strength index in the negative zone suggest that bears have the upper hand.
If the bears can sink and close (UTC time) the price below $9,835, the BTC/USD pair can drop to the next support at $9,000 and then to $8,000.
This bearish view will be invalidated if the bulls can push the price above the $10,625–$11,000 zone. Such a move will indicate that the correction is possibly over.
ETH/USD
Ether (ETH) has formed inside day candlestick patterns for the past three days, which suggests indecision among the bulls and the bears about the next directional move.
ETH/USD daily chart. Source: TradingView
This contraction in volatility is likely to resolve with a strong move within the next few days. The downsloping 20-day EMA ($381) and the RSI in the negative zone suggests that bears have the upper hand.
The ETH/USD pair might weaken if the bears sink the price below the $308.392–$288 support zone. If the price sustains below $288, the selling is likely to intensify, which could pull down the pair to $220.
However, if the volatility expands to the upside and the pair breaks above the $366 resistance, a rally to the 50% Fibonacci retracement level of $398.263 is possible.
XRP/USD
XRP has held the $0.235688 support for the past few days but the bulls have not been able to achieve a strong rebound off it, which suggests that demand dries up at higher levels.
XRP/USD daily chart. Source: TradingView
If the XRP/USD pair does not rise above $0.245 within the next few days, the bears will again attempt to resume the correction. The 20-day EMA ($0.26) is sloping down and the RSI has been trading below the 40 level, which suggests that bears have the upper hand.
If the bears sink the price below $0.229, a drop to the $0.19–$0.20 zone is possible. This bearish view will be invalidated if the bulls can push and sustain the price above the overhead resistance at $0.268478.
LINK/USD
Although the bears are aggressively defending the overhead resistance at $12.89, the positive thing is that the bulls have not allowed Chainlink (LINK) to dip below the trendline, which suggests buying at lower levels.
LINK/USD daily chart. Source: TradingView
If the bulls can push the price above the $12.89–$13.24 resistance zone, a rally to the downtrend line is likely. A breakout of this resistance will be the first indication that the downtrend could be over.
However, the downsloping 20-day EMA ($13.53) and the RSI in the negative zone suggest that bears have the upper hand.
If the LINK/USD pair turns down from the current levels or from the resistance zone, the bears will try to sink it below the trendline. If they succeed, a drop to $8.908 is possible. A breakdown of this support will be a huge negative.
BCH/USD
Bitcoin Cash (BCH) has formed a pennant after the recent fall, which usually acts as a continuation pattern. The 20-day EMA ($253) is sloping down and the RSI is below the 40 level, which suggests that bears have the upper hand.
BCH/USD daily chart. Source: TradingView
If the bears can sink the price below the pennant and the $200 support, selling is likely to intensify and a drop to $140 could be on the cards.
Conversely, if the bulls can push the price above the pennant, a move to $245 is likely. The bears are again likely to defend this level but if the bulls can scale the price above it, the BCH/USD pair could move up to $280.
DOT/USD
Polkadot (DOT) is facing resistance at $4.9210 but the positive thing is that the bulls are not allowing the price to dip below the $4 support.
DOT/USD daily chart. Source: TradingView
If the bulls can push the price above $4.9210, it will be the first sign that the correction might be over. Above this level, a move to the 61.8% Fibonacci retracement level of $5.5899 and then to the 78.6% retracement level of $6.1493 is likely.
Conversely, if the DOT/USD pair again turns down from $4.9210, a few days of range-bound action is possible. The pair will turn negative if the bears sink the price below the $4–$3.5 support zone.
BNB/USD
Binance Coin (BNB) has been among the strongest major cryptocurrencies as it has quickly recovered most of the lost ground. The bulls are currently attempting to sustain the price above the $24 resistance.
BNB/USD daily chart. Source: TradingView
The bears might attempt to stall the up-move at $25.8262 but this resistance is likely to be crossed as the momentum is strong. If the bulls can scale the price above $27.1905, a rally to $32 is likely.
The 20-day EMA ($22.58) has started to turn up once again and the RSI is just above the midpoint, which suggests that the bulls have a slight advantage.
However, if the price turns down from the current levels, the BNB/USD pair could remain range-bound for a few days.
BSV/USD
The relief rally in Bitcoin SV (BSV) is likely to face resistance at the 20-day EMA ($182), which is sloping down. The RSI is also in the negative territory, which suggests that the bears have the upper hand.
BSV/USD daily chart. Source: TradingView
However, if the bulls can push the price above the 20-day EMA, a move to the downtrend line is likely. A break above this resistance will signal strength and can result in a move to $227.
On the other hand, if the BSV/USD pair turns down from the 20-day EMA or the downtrend line, the bears will once again attempt to sink the price below the $146.20–$135 support zone. If they succeed, the decline can extend to $100 and then to $77.
LTC/USD
Litecoin (LTC) has bounced off the $45.1626 support, which suggests strong buying at lower levels. The bulls will now try to push the price to the overhead resistance zone of $51–$52.3594.
LTC/USD daily chart. Source: TradingView
The 20-day EMA ($53.79) is sloping down and the RSI is in the negative territory, which suggests that bears have the upper hand. They are likely to defend the overhead resistance zone aggressively.
If the LTC/USD pair turns down from either resistance, the bears will try to sink the price below the $45.1626 support. If they succeed, a drop to $39 is likely. However, if the bulls can push the price above $52.3594, it will suggest that the correction might be over.
CRO/USD
Crypto.com Coin (CRO) is attempting to rebound off the $0.144743 support, which is just below the 23.6% Fibonacci retracement level of $0.151783. The relief rally is likely to face resistance at the 20-day EMA ($0.160), which is sloping down.
CRO/USD daily chart. Source: TradingView
If the price turns down from the 20-day EMA, the bears will attempt to deepen the correction by sinking the CRO/USD pair below $0.144743. If they succeed, the next support is at the 38.2% Fibonacci retracement level of $0.127459.
Conversely, if the bulls can push the price above the 20-day EMA, a move to $0.183416 and then to $0.191101 is likely. A breakout above this level will indicate the resumption of the uptrend.
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 exchange.