In 2020, public companies bought nearly 85,000 Bitcoin, and institutional investors have put money into Grayscale investments. According to analysis, rising institutional adoption is one of the main reason for the recent BTC rally.
However, now it looks like institutional investors will chase prices higher. If the fresh inflow of money stalls or decreases drastically, it could result in a pullback in BTC’s price. In that case, short-term traders and momentum players may book profits and cause a deeper correction.
Significantly, a correction will be a healthy sign as it will shake out the speculators; therefore, only the long-term HODLers will be in the markets. As the price drops, additional institutional investors may start buying at lower levels. The shift of BTC’s ownership from speculators to long-term investors will be positive in the long term.
If BTC enters a deeper correction, several altcoins will follow
If the dominant cryptocurrency enters a deeper correction in the short term, several altcoins should follow suit.
The digital currency broke above the 20-day exponential moving average on January 25, which equals $33,254. However, the traders used this increase to sell, which weighed on prices to $30,450 support on January 26. Notably, the bulls bought this dip. However, it could not drive the price above the 20-day EMA.
On Thursday, the BTC/USD pair has continued its correction today, which indicated the bulls could not absorb the supply. The downsloping 20-day EMA and the relative strength index (RSI) in the negative zone hint bears are in control.
Furthermore, suppose the bears can sink and keep the price below the 50-day simple moving average, $29,407. In that case, the pair will complete a bearish descending triangle pattern.
This bearish view will invalidate if the price recovers and breaks above the downtrend line. In that case, the pair may surge to $40,000 and then to $41,959.63.
The world’s second-largest cryptocurrency could not stay above $1,400 on January 25, showing that the bears were bookings profits at higher levels. The bulls again tried to regroup on January 26. However, the altcoin has turned down today, which means traders may be closing their long positions.
Furthermore, the negative divergence on the RSI indicates the momentum has weakened. If the bears can drag the price below the 20-day EMA, $1,211, a retest of the uptrend line is likely.
If the bulls can sustain the current rebound, it will suggest that they are buying on dips. Additionally, they can shift the ETH/USD pair above the $1,400 to $1,473.096 resistance zone, the uptrend could continue with the next target objective at $1,675.
