- Bitcoin trend is in stagnation as the price is tightly range-bound
- BTC/USD oscillating between $15,780 to $16,150 as bullish wave weakens
- Bitcoin price is once again rejected from $16,467 highs to find support at $16,050
- Ethereum and Ripple also await broader crypto market support to start a breakout
After touching new highs, the Bitcoin trend displaying signs of weakness
Last week Bitcoin price touched $16,500 after a strong bullish wave demolished significant resistances. Traders and investors celebrate the euphoric rise to new yearly highs. Now, the bullish Bitcoin trend faces overbought technical indicators turning the price action relatively mute. Other altcoins, including Ethereum and Ripple, are also displaying signs of weakening upmove.
Bitcoin’s surge may result in profit booking at higher levels causing the pair to enter consolidation phase. The pullback will be healthy, as has been the case in the past few months. As Bitcoin repeats the 2017 glory, the crypto market is once again experiencing ‘Fear-Of-Missing-Out.’ The FOMO factor is pushing the price higher, resulting in an extreme ‘Greed’ rating on the ‘Fear and Greed Index.’
As traders find it hard to resist the temptation of a bursting bull market, the FOMO can quickly reverse the gains and take the fizz out of the cola. It remains to be seen how long the market will go on before traders realize it is running on empty fumes.
Dollar weakness to continue after Biden win
The US dollar weakness is expected to continue after Democrat Joe Biden’s victory as the next US President. He is likely to continue the loose monetary policy and announce a substantial fiscal stimulus in response to Coronavirus’s economic devastation. A loose monetary policy will not bode well for the US dollar, causing its debasement globally.
Traditional governance will return to the White House, and administrative exuberance will tone down. The relatively unstable foreign policy will find stable ground. The country will likely get back to recreating global alliances and end policy paralysis. The strength of the US dollar will be transferred to emerging assets, including Bitcoin. Both gold and Bitcoin will reap the benefits of a weak US dollar.
Bitcoin weekly overview – Bitcoin retreats after touching annual high
The bellwether cryptocurrency is aiming to consolidate above $16,000 after touching a new 2020 high of $16,480. If the coin closes above $16,000 again next week, new strong support around $15,970 will be built that can serve as an accumulation point for future corrections. The higher support level will certainly benefit the overall bullish Bitcoin trend on the weekly charts.
The RSI is treading along the midline as overbought technical indicators attempt to cool down post the recent bull run. In case BTC/USD corrects, the price can pierce the $16,000 support zone to touch the 50-day SMA near $15,500. The daily chart shows a rising 100-day simple moving average of around $14,500. Any exaggerated BTC sell-off will find solace near this pivot point. It is highly unlikely that BTC will extend losses beyond 100-day SMA due to the lack of negative macro or geopolitical news.
The current long-term bullish Bitcoin trend is built upon organic factors comprising of fundamental news. The coin has overcome several technical resistances and survived a torrent of bad news. No wonder there’s consistent buying even at current annual highs. The concrete technical setup is helping the coin reach higher highs on the daily charts. If the current Bitcoin trend continues, traders should expect $18,500 soon on the charts.
Bitcoin domination over altcoins increases with every price rise
Bitcoin is the ‘De-Facto’ king of cryptocurrencies. Despite the rising price of Bitcoin, more investors are flocking towards BTC and not other altcoins. Even a crashing DeFi could not dent the bullish Bitcoin trend. Traders were hoping that a fall in DeFi will trigger some BTC crash, but what happened precisely was the opposite.
Most of the DeFi tokens have lost a considerable portion of their value. The decline started in early September, and by October end, the tokens vanished in thin air. Other altcoins like Ethereum and Litecoin posted moderate gains compared to BTC‘s superb bull run. Interestingly, a large portion of wealth erased from DeFi moved into Bitcoin.
Extremely bullish Bitcoin trend now warrants correction
Every trader or investor worth his salt knows that exuberance must be controlled in time. Overheated markets must be allowed to cool down before disaster hits. Mature assets experience bull runs and then undergo a mild correction. It is a natural and organic way of growth. Similarly, Bitcoin bulls must consolidate above $16,000 to push the support levels and maintain a healthy buying momentum.
It won’t be surprising if the next week posts stagnant candles on the daily charts. It will allow the technical indicators to shed some overbought readings and come down towards neutrality. Traders will also get an opportunity to buy at lower levels. Most importantly, stagnation will be suitable for the long term bullish Bitcoin trend.
Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.