Michael Sonnenshein, CEO of Grayscale, said during an interview with Bloomberg that in addition to hedge funds, pension funds and endowments had started to invest in the grayscale family. This suggests that a broad spectrum of Bitcoin (BTC).
As this trend accelerates, investment banks have also decided they don’t want to be left behind. A recent application from Morgan Stanley shows a purchase of a 10.9% stake in business intelligence firm MicroStrategy, a move likely to gain exposure in Bitcoin. With 70,470 Bitcoin in their possession, MicroStrategy has become a proxy game on Bitcoin.
Several analysts suspect that the current demand could also come from investors who closed their gold positions and bought Bitcoin. To a question about gold’s recent underperformance, CNBC Mad Money presenter Jim Cramer speculated that institutional money can flow into cryptocurrency.
While there have been positive reports of institutional buys, traders should also keep an eye on those who have sold, as at some point the rally will lose momentum and investors will make a profit.
Analysts at Material Indicators suggest mega whales may have booked gains on Jan. 7 when Bitcoin reached $ 40,000 and further sale of whales could also be the reason for the price drop we are seeing today. However, aggressive purchases at lower levels resulted in a strong recovery.
But that hasn’t stopped the whales from selling. Bitcoin whales in South Korea have ditched their positions in recent days, as evidenced by the multiple $ 100 million deposits exchanges. While the sale has not resulted in a massive rush to the exit, traders should be careful with their positions as even if a few major US investors rush to the exit, it could result in a sharp drop.
If Bitcoin corrects sharply, most altcoins are likely to follow as well, but if Bitcoin remains strong, these top 5 cryptocurrencies could outperform in the short term.
Let’s analyze their charts to find the critical levels to look at.
BTC / USD
Bitcoin has seen a strong upward trend in recent weeks, but the rally has pushed the relative strength index (RSI) into overbought territory. While markets can remain overbought for a long time, any rise increases the risk of a sharp correction.
The first support on the downside is the January 8 intraday low at $ 36,518.73. If the price bounces back from this level, it will suggest that traders are not rushing to profit and buying with small troughs.
If the bulls push the price above USD 41,959.63 the uptrend could resume with the next target target of USD 45,000 and then USD 50,000.
However, if the bears drop the price below $ 36,518.73, the BTC / USD pair could fall towards the 38.2% Fibonacci retracement level from the most recent leg of the upward move at $ 32,816.03.
This is a crucial support to keep an eye out for as if it creaks several traders could panic and dump their positions which could result in a deeper correction to the 61.8% retracement level at $ 27,167.10.
The 4-hour chart shows that the price is currently in a range of $ 38,000 to $ 41,959.63. If the bulls can push the price above the range, the uptrend can resume.
On the other hand, if the bears drop the price below the support of the range, it suggests that traders are making a profit.
The next support on the downside is the 50-simple moving average, which has not been decisively broken during previous corrections in this part of the uptrend. So if this support bursts, it will signal a possible trend change.
ADA / USD
Cardano (ADA) is currently consolidating in an upward trend. The altcoin has been stuck between $ 0.2632811 and $ 0.3542857 for the past few days, taking the RSI down from deeply overbought levels.
The bulls are currently experiencing firm resistance near the USD 0.34 level, but a positive sign is that there are no signs of panic selling yet. If the bulls can drive price above overhead resistance, the next leg of the uptrend can resume.
The ADA / USD pair has a target of USD 0.449, but the bears are likely to build a stiff resistance near USD 0.40. However, if the bulls can push the price above resistance levels, the pair could move towards the psychological level at USD 0.50.
This optimistic view will be voided if the pair turns off and falls below the 20-day EMA ($ 0.234). Such a move suggests that the uptrend may have peaked.
The 4-hour graph shows the formation of a symmetrical triangle, which usually acts as a continuation pattern. The bulls are currently trying to defend the 20 EMA. If the price bounces off current levels, the bulls will try to push the pair above the triangle.
If they succeed, the pair can accumulate up to $ 0.525. However, if the pair dips below the triangle, the next support will be the 50-SMA, but if this support also bursts, the decline could extend to USD 0.20.
EOS / USD
EOS trades in a wide range between $ 2.20 and $ 3,949. The altcoin has fallen sharply from overhead resistance today, indicating aggressive sales by the bears.
However, if the bulls defend the moving averages, the EOS / USD pair could try again to increase the overhead resistance at USD 3,949. A breakout of this level suggests the start of a new uptrend that could reach USD 5,698.
This view becomes invalid if the bears sink and keep the price below the moving averages. Such a move could result in a drop to the support of the range at $ 2.20 and that could keep the pair range bound for a few more days.
The 4-hour chart shows that the price fell sharply from overhead resistance and broke below both moving averages. This suggests aggressive sales by the bears.
However, if the price bounces back from its current level and moves above the 20 EMA, it will suggest that the sale may be over. The bulls can then try again to bring the price to the overhead resistance.
Conversely, if the bears keep the price below $ 3, the pair could drop to $ 2.50 and then to $ 2.20.
THETA / USD
THETA is currently consolidating in an upward trend for the past few days. The price has made lower highs, suggesting that any attempt to rally is met with sales of the bears.
One small positive, however, is that the bulls have not lowered the price below the USD 1.7611 support. The 20-day EMA ($ 1.74) is just below this level and the bulls are likely to defend it aggressively.
If the bulls can push the price above USD 2.20, the THETA / USD pair could move up to USD 2.51. The ascending moving averages and the RSI in the positive area suggest that bulls are in control.
If the bears continue to sell and the pair sink below the 20-day EMA, it could open the gates for a drop to the 50-day SMA ($ 1.12).
The 4-hour graph shows a descending triangle formation. The flat moving averages and the RSI just below the midpoint suggest a balance between supply and demand.
If the bears can sink and keep the price below USD 1.7611, the descending triangle pattern will be completed and that could drag the price to USD 1.01.
On the other hand, if the bulls can push the price above the triangle, it will invalidate the bearish pattern. This could push the price towards USD 2.51 and if the bulls can push the price above this resistance, the upward move could reach USD 2.95.
AAVE / USD
AAVE is currently in an uptrend as it continues to form ever higher highs and higher lows. However, the long wick of the current candlestick shows that bears are selling aggressively at higher levels.
The rising moving averages and the RSI near the overbought zone suggest the path of least resistance is up. If the AAVE / USD pair corrects further, a rebound from the 20-day EMA ($ 99.93) will confirm that traders are continuing to buy on dips.
If the buyers can push the price above $ 135.99, the uptrend could resume with the next likely target at $ 150.
However, if the bears drop the price below the 20-day EMA, the pair could drop to the 50-day SMA ($ 85). A break below this support could result in a drop to USD 70 and then to USD 60.
The 4-hour chart shows the pair trading in a bullish channel. The bulls are currently trying to defend the 20-EMA. A strong bounce could push price towards the channel’s resistance line.
A break above the channel could result in a sharp upward move, but if the price moves down from the channel’s resistance line, the pair can trade in the channel for a few days.
If the price falls below the 20-EMA, a drop to the channel’s support line is possible. A strong rebound from this support will keep the uptrend intact, but a break below it could signal a trend change.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trade move carries risks, you should do your own research when making a decision.