The supply and demand equation determines the price of an asset. In recent months, the recovery in institutional demand for Bitcoin (BTC) has resulted in a strong upward trend. This upward trend can continue until demand exceeds supply.
On-chain data shows two withdrawals of more than 12,000 bitcoin each from Coinbase Pro this week, just below the 28,000 bitcoin mined in November.. This suggests that demand from institutional investors remains intact even after Bitcoin’s recent rally as they are bullish over the long term.
The second richest man in Mexico, Ricardo Salinas Pliego, said in an interview with Cointelegraph that Bitcoin was his “best investment”. Salinas has around 10% of its liquid portfolio in Bitcoin and is in no rush to sell as it wants to “sit for another five or ten years”.
Strong demand and HODLing from institutional investors have pushed Bitcoin’s market cap to over $ 500 billion for the first time. It has also driven the dominance of the Bitcoin market above 70.5%, suggesting that the inflow of money was mostly towards Bitcoin.
But at some point fresh money is no longer flowing into bitcoin and this could lead to a correction or consolidation. Traders can then turn their attention to selected altcoins that could gain momentum.
Let’s look at the charts of the top five cryptocurrencies that could bounce back in the coming days.
BTC / USD
Bitcoin price broke the overhead resistance of $ 24,302.50 on December 25 and continued the uptrend. This breakout has a target of $ 28,664.04 and the price hit an intraday high of $ 28,419.94 today.
The unstoppable surge in the BTC / USD pair has absorbed traders who had been waiting on the verge for a dip. Institutional investors, momentum traders, and speculators have also joined the party that kept the uptrend intact.
However, the current rate of increase is not sustainable. The long wick of today’s candle suggests a reserve of earnings at higher levels. Even if the uptrend continues, the pair could sell near the $ 30,000 mark again.
If the uptrend falters, short-term traders could rush to exit, which could push the price back toward the 20-day exponential moving average ($ 22,613).. If this support holds, the pair could try again to continue the uptrend.
On the other hand, a break below the 20-day EMA could push the price to a critical support of $ 20,000. Hence, traders can avoid chasing higher prices.
The 4 hour chart shows the formation of a Doji candlestick pattern, suggesting an indecision between the bulls and the bears. Although the uncertainty has been resolved downwards, the long tail of the candle indicates buying at lower levels. This suggests that traders buy with every small break-in.
However, Unless the bulls push the price above $ 28,419.94, the selling can continue which could bring the price down to 20 EMA to $ 25,446.. Overbought levels in the Relative Strength Index also suggest a possible correction.
A break below the 20 EMA and support at $ 24,302.50 suggest that momentum has weakened.
LTC / USD
In a strong uptrend, traders generally buy dips for the 20-day EMA (USD 105) and that is exactly what happened on December 23rd. Litecoin (LTC) rebounded strongly on December 24th and momentum accelerated after the bulls pushed the price above the overhead resistance zone from $ 118.64 to $ 124.12.
The immediate target is $ 145, but if the bulls don’t allow the price to drop and stay below $ 124.1278, the rally can extend to $ 180. The rising moving averages and RSI in the overbought zone suggest that the bulls are in control.
This bullish view will be invalidated if the LTC / USD pair turns away from current levels or overhead resistance and breaks below the 20-day EMA. Such a move will suggest that traders are not buying the dips.
The 4-hour chart is also in an uptrend as both the moving averages are rising and the RSI is in positive territory. However, momentum has weakened as the bulls encounter resistance near $ 136.
If the bulls do not allow the price to stay below the 20 EMA level, the pair could hit its target of $ 145. However, if the price deviates from current levels and falls below $ 118.6497 and the 50 simple moving average, it signals the beginning of a deeper correction.
BCH / USD
Bitcoin Cash (BCH) has repeatedly attempted to break the $ 353 overhead resistance over the past few days. Although the bulls pushed the price above USD 353 twice, which was marked by an ellipse on the chart, they were unable to sustain the higher levels.
This suggests that traders are aggressively selling above $ 353 on any rally. On the positive side, however, the bulls have fallen below $ 280 and are currently trying to push the price above $ 53.
If successful, the BCH / USD pair could begin its journey towards USD 500. It may not be a direct race towards the goal as the bears will try again to stop the rally at $ 409 and $ 430. However, if both levels are scaled, the pair could gain momentum.
The rising moving averages and the RSI above 61 suggest that the bulls have the upper hand.
The 4-hour chart shows the pair is currently trading in a wide range between $ 255 and $ 370. The bulls are currently trying to push the price above the overhead resistance of $ 353-370.
If successful, the pair could initiate an uptrend with a target of $ 485. The moving averages have completed a bullish crossover and the RSI is in positive territory, suggesting that the bulls have the upper hand.
However, if the price drops from current levels or $ 370, the pair may extend their stay within the range for a few more days.
XMR / USD
The long wick of the candle on December 23rd shows traders made gains after Monero (XMR) hit $ 167, the target of the inverse head and shoulders breakout.
On the positive side, however, the bulls bought the jump into the 20-day EMA ($ 151) on December 24th. The rising moving averages and the RSI in the positive zone suggest that sentiment remains positive.
The long tail of today’s candle shows that the cops are buying dips. If they can push and hold the price above $ 170, the XMR / USD pair could move towards the next target at $ 197, just below the psychological resistance at $ 200.
This positive view will be invalidated if the price deviates from current levels and falls below the 20-day EMA. Such a move could indicate a lower correction to $ 135.50.
The 4-hour chart shows that the pair has traded within an upward channel but The bulls failed to push and hold the price in the upper half of the channel. The pair have generally fallen from the center of the canal.
This suggests that short-term traders benefit from this at times. However, if the bulls can push and hold the price above the midpoint of the channel, the pair could move up to the channel’s resistance line and signal a rebound in momentum.
On the other hand, a break below the channel’s support line could indicate a possible near-term trend reversal.
THETA / USD
THETA has rallied vertically in the past few days, pushing the RSI deep into overbought territory. This has triggered a correction, as evidenced by today’s sharp decline.
However, if the price does not fall and stays below the 38.2% fib retracement level at $ 1.31994, it suggests that traders will continue to buy on the dips as they anticipate the rally further expands.
If the bulls can push the price above $ 1,742, the THETA / USD pair could rise to the psychological level of $ 2 and then to $ 2.40.
Contrary to this bullish assumption, If the bears pull the price below the 50% fib retracement level to $ 1.18957, it suggests that momentum has weakened.
The 4-hour chart shows that the bulls are trying to defend the 20 EMA. If the pair bounces off this level, the bulls will try to resume the uptrend. The rising moving averages and the RSI in positive territory suggest that the bulls are in control.
If, contrary to this assumption, the pair breaks below the 20 EMA, it suggests that near-term momentum has weakened. That could push the price to the closest support at the 50 SMA.
The views and opinions expressed are those of the author only and do not necessarily reflect the views of Cointelegraph. Every investment and trade movement involves risk. You must do your own research when making a decision.