In his speech on Aug. 27, U.S. Federal Reserve chairman Jerome Powell said that the central bank will allow inflation to stay above its 2% target level if the figure has been languishing below that level for a long time. Some analysts believe that this could mean no rate hikes for at least five years.
In response to the speech, the U.S.dollar index (DXY) resumed its downtrend while gold is trading in the black. This shows that traders believe that the central bank’s change in strategy could debase the dollar further, hence, the demand for gold as a store of value remains intact.
Gemini co-founder Tyler Winklevoss believes that eventually, Bitcoin (BTC) will overtake gold as the store of value due to its inherent advantages. Bitcoin’s current market capitalization is just above $200 billion while gold’s market cap is roughly $9 trillion. That means Bitcoin will have to rise 45-fold to $500,000 to reach the desired target objective, according to Winklevoss.
Daily cryptocurrency market performance. Source: Coin360
Such a huge spike in Bitcoin’s price is unlikely to happen without the participation of the institutional investors. Fortunately, recent developments have shown that institutional demand has been picking up in 2020.
In order to attract large ticket buyers, Fidelity has filed the paperwork with the US regulators to launch a new Bitcoin fund dedicated to its institutional clients. Even if institutional investors only allocate 1% of their funds into Bitcoin, it could spark a sharp rally.
So, is this a good time for retail traders to consider buying, or could the crypto market enter a period of correction? Let’s study the charts to find out.
Although Bitcoin had been trading below the 20-day exponential moving average ($11,530) for the past two days, the bears could not sink the price below the $11,000 support, which suggests that bulls are buying on dips.
BTC/USD daily chart. Source: TradingView
The 20-day EMA has flattened out and the relative strength index is close to the midpoint, which shows a balance between supply and demand.
If the bulls can push the price above the 20-day EMA, a retest of the overhead resistance at $12,113.50 is likely. The next uptrend is likely to start after the bulls can sustain the BTC/USD pair above the $12,113.50–$12,460 resistance.
Conversely, if the pair turns down from $12,113.50, the bears will once again attempt to sink the price below the $11,000 support. If successful, a retest of the critical support at $10,400 is possible. A break below this level will be a huge negative.
The bulls are aggressively defending the $366 support, which is a positive sign. If they can sustain the price above the 20-day EMA ($392), Ether (ETH) can rise to $415.634 and above it to the $446.479 resistance.
The 20-day EMA is flat and the RSI is just above the 50 level, which suggests a balance between supply and demand. A break above $446.479 is likely to resume the uptrend with the next target objective at $480.
Conversely, if the bears defend the $415.634 resistance aggressively, the ETH/USD pair could drop to $366 levels. Such a move will be a huge negative as that could form a bearish head and shoulders pattern, increasing the possibility of a deeper correction.
XRP broke below the $0.268478 support on Aug. 27 but the bulls purchased the dip to the 50-day simple moving average ($0.255), which suggests demand at lower levels.
XRP/USD daily chart. Source: TradingView
Currently, the buyers are attempting to push the price back above $0.268478. If they succeed, a move to the 20-day EMA ($0.28) is possible. This level is likely to act as a stiff resistance but if the buyers can scale the price above it, a move to $0.326113 is likely.
However, if the XRP/USD pair turns down from the 20-day EMA, the bears will try to break the 50-day SMA support and if they succeed, a drop to the 61.8% Fibonacci retracement level of $0.241068 is possible.
With the 20-day EMA gradually sloping down and the RSI in the negative zone, the advantage is with the bears.
Chainlink (LINK) has been hovering around the 20-day EMA ($14.56) for the past few days and has formed a symmetrical triangle pattern, which suggests indecision.
LINK/USD daily chart. Source: TradingView
If the bulls can push the price above the triangle and the $16 resistance, a move to the pattern target of $18.69 and then to $20.1111 is possible.
The 20-day EMA is rising gradually and the RSI has been sustaining in the positive territory, which suggests that the advantage remains with the bulls.
However, if the LINK/USD pair turns down and breaks below the triangle, it will be a huge negative and can result in a drop to the 50-day SMA ($11.13). Such a move will suggest that a short-term top has been made at $20.1111.
The weak bounce off the 50-day SMA ($272) on Aug. 26 attracted another round of selling that pulled Bitcoin Cash (BCH) down to the first support at $260.
BCH/USD daily chart. Source: TradingView
Currently, the bulls are defending the $260 support but the recovery is likely to face stiff resistance at $280. The downsloping 20-day EMA ($284) and the RSI in the negative zone suggests that bears have the upper hand.
If the BCH/USD pair turns down from the 20-day EMA, the bears will again attempt to sink the price below the $260 support. If they succeed, a drop to $240 is possible.
However, if the buyers push the price above the 20-day EMA, a retest of the overhead resistance at $326.30 is likely.
Litecoin (LTC) has bounced off the 50-day SMA ($53.78), which suggests that the bulls are aggressively defending this support. They will now try to push the price above the downtrend line, which could extend the recovery to $63 and then to $68.9008.
LTC/USD daily chart. Source: TradingView
However, the 20-day EMA ($58.84) is sloping down and the RSI is just below 50, which suggests a marginal advantage to the bears.
If the LTC/USD pair turns down from the downtrend line, it will suggest that the bears are selling on rallies. If they can sink the price below the 50-day SMA, the decline can extend to the critical support at $51.
The bulls are currently attempting to defend the $180 support but any recovery in Bitcoin SV (BSV) is likely to face stiff resistance at $200.
BSV/USD daily chart. Source: TradingView
If the BSV/USD pair turns down from $200, the bears will attempt to resume the correction by pulling down the price to $160 and then to $146.20.
Conversely, if the bulls can push the price above the moving averages, the recovery can extend to the downtrend line. The bears are again likely to defend this resistance aggressively.
The pair is likely to pick up strength after the bulls can propel the price above the $227 overhead resistance.
Crypto.com Coin (CRO) has been trading above the 20-day EMA ($0.167) for the past three days, which is a positive sign.
CRO/USD daily chart. Source: TradingView
The 20-day EMA has been gradually sloping up and the RSI is in the positive territory, which suggests that bulls have the upper hand.
A breakout and close (UTC time) above $0.176596 will signal a possible resumption of the uptrend. The bears are likely to defend the highs at $0.191101 but if the bulls can push the price above it, a move to $0.20 is possible.
Contrary to this assumption, if the bears sink the price below the 20-day EMA, the CRO/USD pair could drop to the 50-day SMA ($0.158) and then to $0.154322.
Binance Coin (BNB) broke above the downtrend line and the overhead resistance of $22.93 on Aug. 27, which suggests that the bulls are back in the game.
BNB/USD daily chart. Source: TradingView
However, the bears are unlikely to give up without a fight. They will offer a stiff resistance in the $23.91–$24.4588 zone. If the BNB/USD pair turns down from this resistance, the bears will try to sink the price to $20.5710.
The 20-day EMA ($22.28) has turned up marginally and the RSI is in the positive territory, which suggests advantage to the bulls. If the buyers can push the price above the overhead resistance zone, a rally to $27.1905 is possible.
EOS corrected sharply from the Aug. 16 highs of $3.95 and fell to an intraday low of $2.8577 on Aug. 27, which completed a 100% retracement of the entire leg of the rally that had started on Aug. 12.
EOS/USD daily chart. Source: TradingView
The bulls are currently attempting to start a relief rally, which is likely to face stiff resistance at the 20-day EMA ($3.23). If the price turns down from this resistance, it will suggest that the bears are selling on rallies.
They will then try to sink the EOS/USD pair below the $2.83 support and if they succeed, a drop to $2.60 is possible.
Conversely, if the bulls can push the price above the 20-day EMA, the recovery could extend to $3.42 and then to $3.631.
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.