The rally in stocks could be giving Bitcoin price a boost, and the crypto market could see more fireworks if
The rally in stocks could be giving Bitcoin price a boost, and the crypto market could see more fireworks if the Fed confirms investors’ expectation that rate hikes will slow down.
Bitcoin’s (BTC) price has risen about 37% year-to-date and is not showing any signs of slowing down. The S&P 500 index (SPX) has also made a winning start to the year but has seen a relatively muted rally of roughly 4%.
While the price of risky assets are rising, the United States dollar index (DXY), perceived as a safe haven, extended its downtrend and declined more than 1% in January.
The change in sentiment toward risky assets may have been triggered by expectations that the U.S. Federal Reserve could slow down its rate hikes as inflation cools off. Some analysts even expect the Fed to pivot and start cutting rates before the end of the year.
Several analysts remain skeptical about Bitcoin’s rally but the longer the price sustains above $20,000, the greater the possibility that the macro low may have been made in November. If the next decline forms a higher low, it could further confirm that the worst may be behind us.
Could the rally in Bitcoin and altcoins witness profit booking in the next few days? Let’s study the charts to find out.
SPX
The S&P 500 reversed direction from the downtrend line on Jan. 18 and plunged below the moving averages on Jan. 19 but the bears could not sustain the lower levels.
The bulls purchased the dip on Jan. 20 and pushed the price back above the moving averages. Buyers built upon this strength and are trying to clear the overhead obstacle at the downtrend line on Jan. 23. If they manage to do that, it will suggest a potential trend change. The index may soar to 4,325 with a minor pit stop at 4,100.
Contrary to this assumption, if the index fails to sustain above the downtrend line, it will suggest that bears are active at higher levels.
A break below 3,885 could tilt the short-term advantage in favor of the sellers. The index may then decline to 3,764.
DXY
The U.S. dollar index (DXY) continues to be in a downtrend. Buyers tried to start a recovery on Jan. 18 but the bears did not relent.
The downsloping moving averages and the RSI in the negative territory indicate that bears are firmly in the driver’s seat. Buyers may try to defend the support line of the descending broadening wedge pattern but could face strong selling at the 20-day EMA (103).
On the downside, buyers are likely to guard the psychological level of 100 because if this support cracks, the selling could intensify and the index may tumble to 97.
The first sign of strength will be a break above the 20-day EMA. That could open the doors for a possible rally to the resistance line of the wedge.
BTC/USDT
The bulls pushed Bitcoin above $22,800 on Jan. 21 and Jan. 22 but the long wick on the candlesticks shows that bears are selling at higher levels. The bears tried to start a correction on Jan. 22 but the bulls purchased the intraday dip as seen from the long tail on the candlestick.
Although the upsloping moving averages indicate advantage to buyers, the RSI in the overbought territory cautions that a minor correction or consolidation is possible. For that to happen, the bears will have to pull and sustain the price below $22,292. The BTC/USDT pair could then slide to $21,480.
Conversely, if buyers propel the price above the $23,078 to $23,371 resistance zone, the pair could accelerate to $25,211. The bears may mount a strong defense at this level, which could lead to a short-term correction.
ETH/USDT
Ether’s (ETH) price is facing rejection at $1,680 but a positive sign is that the bulls have not ceded ground to the bears. This suggests that the short-term traders are holding their positions as they anticipate the up-move to continue.
The rising 20-day EMA ($1,483) and the RSI in the overbought territory suggest the path of least resistance is to the upside.
A break and close above $1,680 could start the journey to $1,800. This level may again act as a resistance but if bulls do not allow the price to slip below $1,680 during the next pullback, the likelihood of a rally to $2,000 increases.
This positive view could invalidate in the near term if the price turns down from the current level and slumps below the 20-day EMA. The ETH/USDT pair could then remain range-bound between $1,352 and $1,680 for some time.
BNB/USDT
BNB’s (BNB) relief rally is facing selling near the overhead resistance at $318 but the bulls have not ceded ground to the bears. This suggests that buyers are not rushing to the exit as they expect the price to rise above $318.
The upsloping 20-day EMA ($287) and the RSI in the positive zone indicate that bulls have the…
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