Bitcoin (BTC) had a great 2020 when the BTC price rose 311% in 2020. In the shadow of Bitcoin, Ether (ETH) has also had a fantastic year as the price of Ether rose by an even greater 475%. While it’s just five days into the New Year, ETH continues this trend.
Bitcoin breaking new all-time highs above $ 30,000 has sparked a massive rally fire that is now spilling over to altcoins. The question now is whether the bull run will continue vertically, as in recent months, or whether a correction can be expected in the short term.
Such a correction would open the gates for most cryptocurrencies to track Bitcoin to their own respective record highs.
Bitcoin must support the 21 week MA
There are not many indicators to watch for the continuation of this bull market as only a few provide strong enough arguments for bull / bear business.
But a useful indicator is the 21 week moving average (MA). This MA served as support during the previous bull run, signaling its continuation to a peak at USD 20,000.
As long as Bitcoin rests on this MA, further continuation is likely for the BTC / USD pair. Right now, the 21-week MA has support at the USD 16,000 level.
However, corrections are common with consolidations that can take the next several weeks. During those weeks, the 21-week MA will creep up. Therefore, combining the MA’s future outlook of 21 weeks with the previous all-time record provides an ultimate bottom for a correction in the region of $ 20,000.
Whether Bitcoin has topped out for now is up for debate as BTC continues to flash a lot of bullish signals. This bullish price action is combined with the constant outflow of scholarships, a bullish signal to the market. These Bitcoins are likely to be held for the longer term, making this bull cycle very different from the 2017 bull run.
Taking advantage of the Fibonacci expansion tools, the continuation of the current rally places the next interests at the 1,618 and 2,618 Fibonacci levels, where the next major corrections could take place. Those levels are currently at USD 50,000 and USD 76,000.
However, it should come as no surprise if Bitcoin moves towards $ 76,000 this year, given its recent strength.
Total crypto market cap breaking new highs
Total market capitalization is also making new all-time highs since Bitcoin and Ethereum have boomed in recent weeks. Altcoin’s market capitalization has lagged sharply since Bitcoin often leads the way. But once Bitcoin stabilizes, many other cryptocurrencies will follow suit with sharp rallies.
This happens because of the way money flows through the markets. First, in the spotlight, Bitcoin attracts capital flows. Then, when investors look for even higher risk-return opportunities, the money flows to the large caps, mid caps, and so on.
However, in the case of a consolidation, the levels to consider for the total market capitalization are shown in the chart. It’s the previous record high of about $ 700 billion (which may have already been tested) and the area around $ 550 billion.
What are the levels to watch on lower timeframes?
The hourly chart for Bitcoin is showing a slight decline since its recent peak at $ 34,800. The $ 32,400-32,800 flipped resistance, which is often a bearish signal.
However, the USD 30,000 barrier has already served as support three times. Hence, this is the critical area to hold onto to justify further upward momentum. If this level drops out as a support, a decline to USD 27,000-27,500 is likely.
If so, continuation towards the critical breaker at the top is likely. That way, a $ 32,300-32,800 breakthrough would warrant a retest of the highest region ever and possible continuation towards $ 38,000 and even $ 42,000.
The views and opinions expressed here are solely those of the writer and do not necessarily reflect the view of Cointelegraph. Every investment and trade move carries risks. You should do your own research when making a decision.