Though most major cryptocurrencies have broken below their support levels during the most recent fall, Bitcoin, which is inarguably the leader, has held its ground. This is a positive sign as it shows that the stronger hands are not panicking. This week top venture capitalist Tim Draper also reiterated his bullish view on Bitcoin.
Draper is confident that the leading currency will hit $250,000 by 2022. Additionally, he believes that if Bitcoin’s price action prior to and after the May 2020 halving resembles the trajectory followed during previous halvings, his target might be achieved by the end of the next year itself.
Daily cryptocurrency market performance. Source: Coin360
Patience is the key to long-term success in investing. While it is important to invest when the trend is up, it takes patience to hold on to the investment during corrections. The early investors who held on to their investments pocketed astronomical returns in the first decade of Bitcoin’s existence. As the asset class matures, the returns in the next decade might slow down but cryptocurrencies are still projected to outperform all other asset classes by a wide margin.
Even in a falling market, there are intermittent relief rallies driven by aggressive bulls who purchase in anticipation of a bottom. While short-term traders can profit from these quick trades, investors should wait for a turnaround to be signaled before jumping in. Let’s see if we spot a bottom in any of the major cryptocurrencies.
Bitcoin (BTC) bounced sharply from the critical support at $6,512.01 on Dec. 18. This is a positive sign as it shows that the bulls purchased the dip to the support level aggressively. However, the failure of the buyers to sustain the price above the 20-day EMA indicates a lack of demand at higher levels.
BTC USD daily chart. Source: Tradingview
If the bulls fail to scale above the 20-day EMA within the next couple of days, a retest of $6,512.01 is likely. A breakdown of this support will be a huge negative that can drag the price to $5,533.90. Along with the price damage, such a move will dent sentiment and delay the start of the next up move.
Conversely, if the bulls can defend the psychological support at $7,000, it will increase the possibility of a move to $7,856.76. This is an important level to watch out for on the upside because a break above it will complete a double bottom pattern. We will recommend a buy on a close (UTC time) above $7,856.76. Until then, we remain neutral on the BTC/USD pair.
The relief rally in Ether (ETH) hit a wall just above the breakdown level of $131.484. The bears will now attempt to resume the downtrend. If the price slips below the recent low of $117.09, a drop to $100 is possible.
ETH USD daily chart. Source: Tradingview
Conversely, if the bulls can sustain the price above $131.484, a rally to the 20-day EMA at about $141 is possible. We expect the bears to defend the 20-day EMA aggressively.
If the price turns down from the 20-day EMA but stays above $117.09, the ETH/USD pair will remain range-bound for a few days. We will wait for the pair to form a new buy setup before suggesting a trade in it.
The pullback in XRP from the low of $0.17468 on Dec. 18 was sharp but it hit a wall at the first overhead resistance at $0.20041. This shows a lack of buying at higher levels as the traders are not confident that the downtrend has ended.
XRP USD daily chart. Source: Tradingview
The bulls are currently attempting to hold the price above $0.18 levels. If the XRP/USD pair breaks above $0.20041, a rally to $0.22 is possible.
Conversely, if the bulls fail to push the price above $0.20041 once again, the bears will try to sink the price below $0.17468. If successful, a drop to the next support at $0.15 is possible. As the pair has been among the weakest major cryptocurrencies, we will wait for a reversal pattern to form before proposing a trade in it.
Though Bitcoin Cash (BCH) is facing resistance at $192.52, it has held its ground. This shows that buyers are not waiting for a deeper fall to enter, which is a positive sign. If the bulls can push the price above $192.52, a move to $203.36 is possible.
BCH USD daily chart. Source: Tradingview
If the price can sustain above $192.52, it will signal that the BCH/USD pair might have bottomed out at $169.62. Such a move can offer a buying opportunity.
However, if the pair turns down from the 20-day EMA at $204 and breaks below $192.52, the bears will try to extend the downtrend. The next support on the downside is at $125. We will wait for the pair to sustain above $192.52 before proposing a trade in it.
Litecoin (LTC) is facing resistance at $42.0599. Above this level, the bulls are likely to again hit a roadblock at the downtrend line. If both these levels are scaled, a rise to $50 will be on the cards.
LTC USD daily chart. Source: Tradingview
Nonetheless, if the LTC/USD pair turns down from the overhead resistance at $42.0599 or from the downtrend line, the bears will try to sink the price below the recent low of $35.8582. If successful, a drop to $28 to $30 support zone is possible. We will wait for a bottom to be confirmed before suggesting a trade in it.
EOS climbed back above $2.4001 on Dec. 18 and has sustained the level for the past two days. This is a positive sign as it indicates strong buying at lower levels. There is a minor resistance at the 20-day EMA, close to $2.6, above which a rally to $2.8695 is likely.
EOS USD daily chart. Source: Tradingview
The short-term traders can stay on the long side to pocket some quick gains but we suggest positional traders wait for a rally above the downtrend line before buying.
Contrary to our assumption, if the bears sink the price below $2.4001, the EOS/USD pair can retest the recent low of $2.1624. A break below this level will be a huge negative as it will resume the downtrend.
Binance Coin (BNB) has been trading just below the overhead resistance zone of $13.88 to $14.2555 for the past two days. This is a positive sign as it indicates buying at lower levels. However, the bears are unlikely to throw in the towel easily.
BNB USD daily chart. Source: Tradingview
We anticipate the bears to mount a strong defense between $13.88 and the downsloping 20-day EMA at $14.60. If the price turns down from this resistance zone, a retest of the recent low at $12.1111 is likely.
Conversely, if the bulls can sustain the BNB/USD pair above the 20-day EMA, it will indicate strength. Above this level, a move to $16.50 is possible. We will wait for the price to sustain above $14.2555 before turning positive.
Bitcoin SV (BSV) has held the support at $78.506, which is a positive sign. This shows that buyers are active close to support levels. The relief rally will face resistance at the downtrend line and above it at the 20-day EMA, close to $94.
BSV USD daily chart. Source: Tradingview
A breakout of the 20-day EMA will be the first indication that buyers are back in the game. If the price sustains above $94, it could offer a buying opportunity.
Our bullish view will be invalidated if the BSV/USD pair turns down from the overhead resistance and dips below $78.506. If this level breaks down, the downtrend can extend to $66.666.
Tezos (XTZ) has turned volatile with large intraday ranges in the past two days. This indicates that both bulls and bears are attempting to assert their supremacy. This might keep the altcoin range-bound between $1.18 and $1.65 for the next few days.
XTZ USD daily chart. Source: Tradingview
A break above $1.65 can carry the price to $1.85. We anticipate a stiff resistance at this level but if the bulls can scale above it, the XTZ/USD pair will pick up momentum.
On the downside, a break below $1.18 will be a negative sign that can drag the price to $1.10. We do not find any reliable buy setups at the current levels, hence, we remain neutral on the pair.
The pullback in Stellar (XLM) could not even reach the breakdown level of $0.051014. This is a negative sign as it shows a lack of buyers at higher levels. The bears will once again attempt to resume the downtrend by breaking below the recent low of $0.042133. If successful, the next stop is likely to be $0.036769.
XLM USD daily chart. Source: Tradingview
However, if the bulls defend the support at $0.042133, the XLM/USD pair might consolidate for a few more days. The first sign of strength will be after the bulls scale and sustain the price above $0.051014. Until then, we suggest traders remain on the sidelines.
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.