The recovery in cryptocurrency prices has ignited interest among institutional investors. In 2019, dedicated crypto funds returned more than 16% according to Eurekahedge while traditional hedge fund strategies returned 10.4% according to Hedge Fund Research, Inc. Several hedge funds and large trading firms use speed to their advantage by benefitting from pricing inefficiencies.
Others profit from the spreads between bids and offers. While such entrants will improve the liquidity and provide depth to the markets, the crypto space will benefit more from investors who are in it for the long-term.
Daily cryptocurrency market performance. Source: Coin360
Bitcoin futures open interest has surged to over $1 billion on both Bitmex and OKEx. It is not only Bitcoin futures that are attracting traders, but even Bitcoin futures options turnover has also surged 70% month-on-month, according to Deribit.
Increasing open interest with a rise in price is a bullish sign as it shows accumulation. However, as open interest increases, the market also becomes vulnerable to long liquidation if the price turns down sharply. Let’s study the charts to find out whether they indicate a move higher or a correction from the current levels.
BTC/USD
Bitcoin (BTC) has been trading inside the $9,200 to $9,600 range for the past few days. This shows that the bulls and the bears are playing it safe and are avoiding large directional bets.
If the bears sink the price below the range, a drop to the 20-day EMA at $8,897 is possible. We expect the bulls to defend the 20-day EMA aggressively. A bounce off this support will indicate demand on dips and will increase the possibility of a rally above $9,600.
BTC USD daily chart. Source: Tradingview
With both moving averages sloping up and the RSI in the positive zone, the advantage is with the bulls. If the buyers can push the price above $9,600 and sustain it, a move to $10,360.89 is possible.
Nonetheless, if the bears sink the BTC/USD pair below the 20-day EMA, a drop to the 50-day SMA at $8,058 is likely. For now, the stops on the long positions can be kept at $8,200. The short-term traders can book partial profits if the price sustains below the 20-day EMA.
ETH/USD
Ether (ETH) bounced off the support at $173.841 on Jan. 31 and reached close to the overhead resistance at $197.75 on Feb. 3. We expect the bears to defend the resistance at $197.75 aggressively.
ETH USD daily chart. Source: Tradingview
However, if the bulls do not give up much ground from the current levels, it will increase the possibility of a breakout of $197.75. With both moving averages sloping up and the RSI close to the overbought zone, the advantage is clearly with the bulls. On a break above $197.75, the next target to watch out for is $223.999.
Our bullish view will be invalidated if the ETH/USD pair turns down from the current levels and dips below the 20-day EMA at $171.46. The traders can book partial profits on the long positions at current levels and trail the stops on the rest to $170.
XRP/USD
After staying above $0.2326 for two days, XRP bounced off sharply on Feb. 2 and broke above the immediate resistance at $0.25401. The inverted head and shoulders pattern has a target objective of $0.28132.
XRP USD daily chart. Source: Tradingview
The 20-day EMA is sloping up and the RSI is in the positive territory, which suggests that bulls have the upper hand. If the buyers can push the price above $0.28132, a move to $0.31503 is possible.
Our bullish view will be invalidated if the XRP/USD pair turns down from the current levels and breaks below the neckline. Therefore, the stops on the long positions can be kept at $0.21.
BCH/USD
Bitcoin Cash (BCH) has been consolidating between $360 and $400 for the past few days. A consolidation near the overhead resistance is a positive sign as it shows that the buyers are in no hurry to close their positions.
BCH USD daily chart. Source: Tradingview
If the bulls can push the price above the overhead resistance at $403.88, the BCH/USD pair will resume its up move. The next target to watch on the upside is $440 and above it $480. The upsloping moving averages show that bulls are in command.
However, the developing negative divergence on the RSI warrants caution. If the bears sink the price below the support at $360 and the 20-day EMA at $347, the pair will turn negative and can plummet to $306.78.
BSV/USD
Bitcoin SV (BSV) has been bouncing off the support line of the symmetrical triangle for the past three days. However, the bulls have not been able to build upon the rebound, which suggests a lack of demand at higher levels.
BSV USD daily chart. Source: Tradingview
If the BSV/USD pair fails to bounce sharply within the next couple of days, the bears will try to break below the triangle. If successful, a drop to $236 is possible. If this support also cracks, the decline can extend to $159.52.
Conversely, if the bulls can carry the price above the triangle and the overhead resistance at $337.80, the pair will attempt to retest the lifetime highs at $458.74.
LTC/USD
Litecoin (LTC) has been trading above the breakout level of $66.1486 for the past three days, which is a positive sign. However, the price has failed to pick up momentum and move up to the next overhead resistance at $80.2731.
LTC USD daily chart. Source: Tradingview
This shows that the bulls are tiring. The RSI in the overbought zone suggests that the near-term rally has been overdone and a pullback is possible.
If the LTC/USD pair breaks below $66.1486, a drop to the 20-day EMA at $60.7 is possible. We expect the bulls to defend this support aggressively. If the price bounces off the 20-day EMA, the bulls will once again attempt to push the price above $80.2731. If successful, the rally can extend to $96.439.
Our bullish view will be invalidated if the pair dips below the 20-day EMA. In such a case, the decline can extend to the next support at $50.
EOS/USD
EOS has been trading close to $4.24 for the past few days. This is a positive sign as it shows that the traders are not booking profits at these levels. With both moving averages sloping up, the advantage is with the bulls. If the buyers can push the price above $4.4, a rally to $4.8719 is possible.
EOS USD daily chart. Source: Tradingview
On the other hand, if the bulls fail to scale above $4.4, the EOS/USD pair is likely to dip to the 20-day EMA at $3.82, which should act as strong support.
If the price bounces off the 20-day EMA, the bulls will once again attempt to carry the price to $4.8719. However, if the bears sink the pair below the 20-day EMA, a drop to $3.3555 is possible.
BNB/USD
Binance Coin (BNB) has been hovering around the overhead resistance at $18.50 for the past few days. This shows indecision among the bulls and the bears about the next likely direction.
BNB USD daily chart. Source: Tradingview
If the bulls fail to push the price above $19 within the next few days, a dip to the 20-day EMA is likely. We expect the price to bounce off this support. If successful, the bulls will again attempt to carry the price to the next overhead resistance at $21.80.
However, if the bears sink the price below the 20-day EMA, a drop to the next support at $16.50 is possible. The traders can keep the stop loss on the long positions at $15.90.
ADA/USD
The bulls are attempting to propel Cardano (ADA) to the next overhead resistance at $0.065229. However, they have not been able to sustain the price above $0.0560221. This shows that buying dries up at higher levels.
ADA USD daily chart. Source: Tradingview
When the price fails to move up, it leads to profit-booking by short-term traders. This can drag the price down to the immediate support. In this case, the failure to move up can sink the price to the 20-day EMA at $0.0488. If the bulls defend this level, the ADA/USD pair will again attempt to move up to $0.065229.
Our bullish view will be invalidated if the bears sink the price below the 20-day EMA. Therefore, traders can keep the stop loss on the remaining long positions at breakeven.
XTZ/USD
Tezos (XTZ) has soared today that has propelled it to the top 10 list. The altcoin broke out of the stiff overhead resistance at $1.85 on Feb. 2, which completed an ascending triangle pattern. This bullish setup has a target objective of $3.35.
XTZ USD daily chart. Source: Tradingview
However, the RSI has jumped deep into the overbought territory, which suggests that the rally has run up ahead of itself in the short-term. Therefore, a pullback to the breakout level of $1.85 is possible. Such a dip would offer a buying opportunity to the traders.
On the other hand, if the XTZ/USD pair continues to move higher, it can reach $2.475, which might act as a resistance. Our bullish view will be invalidated if the price turns down and sustains below the breakout level of $1.85.
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.