The new year couldn’t have got off to a better start for Bitcoin.
After the significant Bitcoin pump we saw last week, where the price of BTC increased close to 20% in the space of a few days, it seems the market has now stabilised.
Nevertheless, I expect this week to maintain the positive trend following the recent price action.
Will Bitcoin’s positive momentum spill over into the altcoin market? If so, which cryptocurrencies could see a trend reversal in the upcoming weeks?
Let’s take a look at the current state of the cryptocurrency market.
Bitcoin dominance (BTC.D)
As you can see in the chart above, courtesy of TradingView, there’s been a sudden 2% drop in Bitcoin’s dominance over altcoins, showing money has been flying from Bitcoin into altcoins this past week.
However, BTC.D is still above all its EMAs on the yearly chart with close to 70% dominance.
This is to be expected given there are a lot of altcoin speculators and investors who are looking to make use of altcoins to increase their BTC bags.
I argue that some investors are taking a gamble on altcoins following the recent market upturn. If price does appreciate, we could soon see a move from altcoins back into Bitcoin as traders secure gains.
Let me further my analysis by looking into some of my favourite altcoin/Bitcoin pairs.
The very first thing I notice in the chart above is that ETH/BTC is below all its EMAs, which is opposite to the BTC.D chart.
Do I expect Ethereum to start recovering soon? It all depends on where the money is flowing, but I usually prefer to respect the current trends. At the moment, it doesn’t look good for ETH.
The volume profile on the left shows there’s some support for ETH/BTC just above 1,800,000 sats, which means we could expect to see Ethereum consolidating at this price level soon.
At the moment, Ethereum is trading at around 1,700,000 sats.
ETH recovered from around 1,600,000 sats in early September to over 2,300,000 sats in mid-October, representing a 31% increase in price. The positive trend lasted until December 2019.
Shortly after, the Bitcoin market started its recovery and Bitcoin pushed 20% higher versus the US dollar. That pump put downwards pressure on Ethereum, which tanked its price below 1,900,000 sats.
When the coin finally starts its recovery, there’s strong resistance around 2,000,000 and 2,300,000 sats, where ETH was previously consolidating before the drop.
For the time being, it seems ETH is still at the perfect range for accumulation.
Much like ETH, Ripple (XRP) is also suffering from a downtrend.
However, even though the coin is trading just below its 20-day EMA, it’s showing signs it wants to start its recovery.
After the BTC pump earlier this month, XRP experienced its own 10% pump against Bitcoin that took the altcoin from 2,620 sats to around 3,000. Since then, XRP has dropped back to the 2,600 level.
Looking at the volume profile, there’s strong support around this level with weak resistance until around 4,000 sats.
If there’s a sudden pump, we could see XRP breaking through its 20-day and 50-day EMAs with relative ease. The next strong resistance levels appear at over 5,000 sats and then again close to 8,500 sats.
For the moment, I expect XRP to consolidate for a short period before a pump towards 4,000 sats.
Meanwhile, the chart for Bitcoin Cash (BCH) is looking quite bullish.
You can see that most of the trading volume is below where BCH is currently sitting, a sign of positive volume coming into the BCH/BTC market.
In addition, price has continuously broken the 2,700,000 sats level, which had been a barrier since mid-December 2019.
Bitcoin Cash has broken all its EMAs and is now sitting close to 3,300,000 sats. Since the start of the year, BCH has increased over 20% in price.
Looking at the current trend, I expect Bitcoin to pump a few more times before the gains start spreading more significantly into key altcoins such as Bitcoin Cash.
Given the above scenario, we could definitely see BCH going towards the 5,000,000 sats level soon.
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