Cryptocurrency Market Update: Bitcoin Consolidation Continues, Outlook Bullish
Bitcoin Consolidates Above EMA
Bitcoin has been on a tear since mid-December. After moving up more than 60% in two months the world’s leading cryptocurrency hit resistance above $10,000 and entered a consolidation. A few week’s ago I suggest this consolidation could last for weeks, that it might move down to test the moving average, and that the long-term outlook remains bullish. Nothing has changed in that time other than 1) BTC/USD has been in consolidation for weeks and 2) it has moved down to retest the 30-day EMA. So, what comes next?
First, let’s recap what it is that is driving the rally in BTC and cryptocurrency in general. The number one driver, for BTC at least, is the upcoming halving. The halving is slated to occur in just 80 days, less than 2.5 months, and it will drastically reduce the amount of BTC readily available to the market. The second event, and this is more important to the broader crypto market, is the Ethereum development team’s announcement that ETH 2.0 will launch this year. In both cases, the news has sparked demand by reviving interest in the technology. In the second case, that demand is lifting not only ETH but the entire ETH complex including ERC-20 tokens and other technologies based on Ethereum.
Bitcoin, Support Is At $9,500
Bitcoin has experienced not one but two down-drafts since hitting resistance that bring Elliot-Wave Theory to mind. In Elliot Waves, traders look for uptrends to consolidate with two down waves before continuing on to higher highs. The move lower has found support at the $9,500 level both times and now that level is consistent with the 30-days moving average. The indicators remain consistent with downward pressure but the signals are weak, provided support remains intact we can expect price action to resume upward movement in the next week or so. If price action breaks support at $9,500 we may see prices bounce from $9,200. Resistance is just above $10,000, if price action closes above that level a move to $11,000, $12,000, and $13,000 become the next likely scenario.
Ethereum Might Lead The Next Upswing In Prices
Ethereum is in the same consolidation as BTC with one difference. Where the bias in BTC is lower ETH has been trending sideways. Support here is at the $250 level and well above the short-term EMA. The indicators are bearish so support may be tested again, if prices don’t continue to bounce higher now, that is. Resistance here is at the $285 level and is likely to be retested soon. The last MACD peak is convergent with the latest high and an extreme peak, two indications of underlying market strength. Once resistance is exceeded a move up to $310 and $350 is likely.
