Bitcoin, the dominant cryptocurrency by market value, has had a great start to 2021. After quadrupling last year, bitcoin’s price briefly surpassed $40,000 for the first time on January 7. Notably, the cryptocurrency is down 17% from its lifetime high, but still up more than 17% since the start of 2021.
Bitcoin is not the only cryptocurrency, which witnessed massive gains. According to the latest news, Ether, the world’s second-biggest cryptocurrency hit an all-time high. The cryptocurrency rose by 6.2% to a price of $1,415.
According to advocates of the digital coin, cryptocurrencies have benefited from heightened institutional demand and its perception as a safe-haven asset similar to gold. Still, sceptics are worried Bitcoin is in a bubble.
Bitcoin broke above the 20-day exponential moving average, $33,851, on January 26. The current up-move could grow to the downtrend line where the bulls are expected to face stiff resistance from the bears.
Furthermore, the flat 20-day EMA and the relative strength index just above the midpoint reveal a balance among supply and demand.
If the price changes course from the downtrend line, the bears will again attempt to sink and sustain the BTC/USD pair below the $30,450 support. If they achieve, the pair will complete a descending triangle pattern with a target objective of $18,940.37.
Contrary to this theory, if the bulls push the price above the downtrend line, the aggressive bears who may have sold short in the past few days could cover their positions, resulting in a short squeeze. Over the downtrend line, the pair could grow to $40,000 and then to $41,959.63.
As we already mentioned, the world’s second-largest cryptocurrency, Ether hit its all-time high. But, the long wick on today’s candlestick hints profit-booking at higher levels.
The relative strength index has also formed a negative divergence, which implies that the momentum may be fading. If the bears lower the price below the $1,350 support, the ETH/USD pair could fall to the 20-day EMA, which equals $1,195.
Meanwhile, a robust rebound off the 20-day EMA will show that the bulls are accumulating on dips. The buyers will then attempt to continue the uptrend. If they can drive the price above $1,500, the pair could grow to $1,675.
In contrast, if the bears drop the price below the uptrend line, the pair may fall to the next support at $840, signalling a trend change.