A month after the first halving, Bitcoin (BTC) moved up by 7% but following the second halving, the price slipped by 10% in a month. This suggests that if history were to repeat itself, the top-ranked cryptocurrency on CoinMarketCap will remain volatile but a large move in either direction is unlikely in the first month. However, the derivatives markets could be giving a signal that this time is different.
This week CME Bitcoin options open interest increased to about $142 million, an increase of over 1000% since the end of April, according to data from Skew. This shows that the options traders are expecting a sharp move in price within the next few days.
There are approximately $661.7 million worth of long positions open, compared to $252 million in short positions, on the three major futures exchanges. This suggests that the futures traders are holding on to their long positions as they are confident that Bitcoin could soon break above the psychological barrier of $10,000.
Daily cryptocurrency market performance. Source: Coin360
Murmurs of negative interest rates have also increased in the U.S. and a report by Stack Funds suggests that if negative rates become a reality, institutional investors would be forced to look for alternative assets to generate higher returns.
With Bitcoin outperforming the U.S. stock markets by a wide margin and doubling gold’s gains year-to-date, institutional interest is likely to rise.
The fundamentals of Bitcoin continue to paint a bullish picture and the derivatives traders are also expecting a trend defining move to start soon.
Let’s study the charts to spot the critical levels that could indicate the start of a new trend in major cryptocurrencies.
Bitcoin (BTC) rallied sharply in the past three days and reached a high of $9,941.68 on May 14. However, the bears are unwilling to allow the bulls to have a field day. Currently there is stiff resistance near $10,000.
BTC–USD daily chart. Source: Tradingview
Nevertheless, the bulls continue to buy the dips, which is a positive sign. Both moving averages are sloping up and the relative strength index is above 60 level, which suggests that the buyers have the upper hand.
If the BTC/USD pair can consolidate between $9,200-$10,000 levels for a few days, it will increase the possibility of a breakout and rally towards the resistance line of the symmetrical triangle around $10,600.
This bullish view will be invalidated if the pair turns down and breaks below $9,200. That can drag the pair to the 20-day exponential moving average ($8,851) and below it to the uptrend line. A break below this support will be the first indication that bulls are losing their grip. A possible change in trend will be signaled on a break below $8,130.58.
Traders can keep an eye on the developing bearish divergence on the RSI, which is a negative sign.
Ether (ETH) climbed above the 20-day EMA ($197) on May 13 and reached the downtrend line on May 14. Although the bears are attempting to defend the downtrend line, the bulls have not given up much ground.
ETH–USD daily chart. Source: Tradingview
If the 2nd-ranked cryptocurrency on CoinMarketCap bounces off the 20-day EMA and breaks above the downtrend line, a rally to $227.097 is possible. This could present a buying opportunity for traders.
However, if the ETH/USD pair breaks below the 20-day EMA and the support line of the ascending channel, a drop to $176.103 is likely. A break below this critical support can signal the start of a downtrend.
XRP bounced off the critical support at $0.17372 but hit a wall at the 20-day EMA ($0.20). This suggests that buying dries up at higher levels. If the price turns down from the current levels and breaks below the 50-day simple moving average, a drop to $0.17372 is likely.
XRP–USD daily chart. Source: Tradingview
Conversely, if the bulls propel the 3rd-ranked cryptocurrency on CoinMarketCap above the 20-day EMA, a move to the downtrend line is possible. This level might again act as a resistance but if crossed, a rally to $0.23612 is likely.
As both moving averages are flat and the RSI is close to 50 levels, this suggests a balance between the bulls and bears. Hence, traders can wait on the sidelines until the bulls indicate that they are back in command.
Bitcoin Cash (BCH) is facing resistance at the 20-day EMA ($243). If the price turns down from this level, the bears will attempt to sink the altcoin back towards $200.
BCH–USD daily chart. Source: Tradingview
Conversely, a break above the 20-day EMA can drive the 5th-ranked cryptocurrency on CoinMarketCap to $280.47.
The flat moving averages and RSI close to the midpoint suggests a balance between supply and demand. The next trending move is likely to start only on a breakout of $280.47 or on a break below $200. Until then, the BCH/USD pair is likely to remain range-bound.
The bounce in Bitcoin SV (BSV) has stalled close to the 20-day EMA ($196). Both moving averages are flat and the RSI is just below the midpoint, which suggests a balance between supply and demand. If the price turns down from the 20-day EMA, a retest of $170 will be on the cards.
BSV–USD daily chart. Source: Tradingview
Conversely, a break above the 20-day EMA can carry the 6th-ranked cryptocurrency on CoinMarketCap to $227.
The BSV/USD pair is in a well-defined range. Hence, the best place to initiate a trade is to buy near the support and sell near the resistance. Another possibility could open up after the pair breaks out of the range, as it will indicate the possible start of a new trending move. Until then, traders should trade with caution.
The rebound off the critical support at $39 is facing resistance at the 20-day EMA ($44.42). This suggests that buying dries up at higher levels. With both moving averages flat and the RSI below the midpoint, Litecoin (LTC) is likely to consolidate for a few days.
LTC–USD daily chart. Source: Tradingview
If the 7th-ranked cryptocurrency on CoinMarketCap turns down from the current levels, a retest of $39 is possible. If the price bounces off this support once again, it could offer a buying opportunity.
On the upside, if the bulls can push the price above the 20-day EMA, a move to the downtrend line and then to $50.7864-$52.2803 zone is possible.
Binance Coin (BNB) has been range-bound between $18.1377-$13.65 for the past few days. The sharp bounce off the support of the range has carried the altcoin to $16.30 which is acting as a resistance.
BNB–USD daily chart. Source: Tradingview
This suggests that the bears are likely to mount a stiff resistance between $16.30 and the downtrend line. If the 8th-ranked crypto-asset on CoinMarketCap turns down from this level, a drop to $13.65 is possible.
Conversely, a break above the downtrend line will clear the path for a move to the resistance of the range at $18.1377. A breakout of the range will be a positive move as it will resume the up move towards $21.50.
EOS is attempting to break out of the downtrend line. If successful, an up move to $2.8319 is likely. This is an important level to watch out for because if the altcoin turns down from here, it will be at risk of forming the right shoulder of a bearish head and shoulders pattern.
EOS–USD daily chart. Source: Tradingview
This setup will complete on a breakdown and close (UTC time) below $2.3314. If that happens, it will be a huge negative because the H&S pattern has a target objective of $1.5524.
Both moving averages are flat and the RSI is close to the center, indicating a balance between supply and demand.
If the bulls can propel the 9th-ranked cryptocurrency on CoinMarketCap above $2.8319, a rally to $3.1104-$3.1802 resistance zone is possible. Above this zone, the EOS/USD pair is likely to pick up momentum.
Tezos (XTZ) is at a critical level as the price is getting squeezed between the 20-day EMA ($2.58) and the support line of the ascending channel. A breakout and close (UTC time) above the 20-day EMA is likely to resume the up move.
XTZ–USD daily chart. Source: Tradingview
The first target on the upside is the downtrend line and above it, the rally can extend to the $3.07369-$3.2712 resistance zone. Therefore, a break above the 20-day EMA can offer a buying opportunity to the traders.
Conversely, if the bears sink the 10th-ranked cryptocurrency on CoinMarketCap below the support line of the ascending channel, a retest of $2.24 is possible. A break below this level could start a downtrend.
Stellar Lumens (XLM) remains in an uptrend but the bears have been defending the uptrend line for the past three days. However, the positive thing is that the bulls have not given up much ground and have kept the price above the 20-day EMA ($0.067).
XLM–USD daily chart. Source: Tradingview
Soon, the bulls are likely to make another attempt to drive the 11th-ranked cryptocurrency on CoinMarketCap above the uptrend line. If successful, the up move is likely to resume with the first target being $0.076994 and then $0.088311.
Conversely, if the XLM/USD pair turns down either from the downtrend line or from the current levels and breaks below the 20-day EMA, a retest of $0.060 is possible. A break below this level will signal a possible change in trend.
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.