Bitcoin and select altcoins are facing selling at higher levels, indicating that short-term traders may b
Bitcoin and select altcoins are facing selling at higher levels, indicating that short-term traders may be booking profits after the recent rally.
Bitcoin’s (BTC) rally above $50,000 seems to have received a boost from institutional buyers who are looking to hedge their portfolio against increasing inflation, said JPMorgan in a note to its clients on Oct. 7. The bank’s analysts speculated that institutional investors may be preferring Bitcoin over gold as a better hedge against inflation.
A recent study titled “Cryptocurrencies and the Sharpe Ratio of Traditional Investment Models” by crypto asset management firms Iconic Funds and Cryptology Asset Group showed that the addition of cryptocurrencies to any portfolio improved returns and risk-reward performance of the portfolio.
Bloomberg senior commodity strategist Mike McGlone said in the October 2021 edition of the Bloomberg Galaxy Crypto Index that $50,000 on Bitcoin may act as strong support during declines in the fourth quarter.
Could the recent rise in Bitcoin and altcoins attract profit-booking by traders or is this the start of a long-term uptrend? Let’s study the charts of the top-10 cryptocurrencies to find out.
BTC/USDT
Bitcoin witnessed profit-booking on Oct. 7 but the bears could not pull the price below the breakout level at $52,920, which is a positive sign. The bulls tried to resume the up-move today but the long wick on the day’s candlestick suggests selling at higher levels.
The first support on the downside is $52,920 but if bears pull the price below this level, the BTC/USDT pair could drop to the psychological level at $50,000 and then to the 20-day exponential moving average ($48,285).
The upsloping 20-day EMA and the relative strength index (RSI) near the overbought zone indicate an advantage to buyers. If the price rebounds off the 20-day EMA, the bulls will again try to resume the uptrend.
A break and close above $56,100 could push the pair to $60,000 where bears may mount stiff resistance. This positive view will invalidate if the price plummets below the 50-day simple moving average ($47,342). The pair could then retest the critical 100-day SMA ($42,691) support.
ETH/USDT
Ether’s (ETH) recovery rose above the immediate resistance at $3,676.28 today but the bulls may find it difficult to sustain the price above it. The RSI is close to the downtrend line, which could act as a resistance.
If the price turns down from the current level, the first support is at the 20-day EMA ($3,324). A strong rebound off this level will indicate that sentiment remains positive and traders are buying on dips.
That will increase the likelihood of a rally to the stiff overhead resistance at $4,027.88. Conversely, if the price plummets below the 20-day EMA, the ETH/USDT pair could drop to the 100-day SMA ($2,899).
BNB/USDT
The bulls are struggling to sustain Binance Coin (BNB) above $433, suggesting that demand dries up at higher levels. The price has slipped back below $433 today and the bears will now try to pull the price below the 20-day EMA ($409).
If they succeed, the BNB/USDT pair could slide to the 100-day SMA ($379). Such a move could increase the possibility of the pair remaining range-bound between $320 and $450 for the next few days.
On the other hand, if the price rebounds off the 20-day EMA, it will suggest that the sentiment remains positive and traders are buying on dips. The bulls will then make one more attempt to clear the overhead hurdle at $450 and start the northward march toward $518.90.
ADA/USDT
After several failed attempts in the past few days, the bulls managed to push and close Cardano (ADA) above the 20-day EMA ($2.25) on Oct. 7. However, the long wick on the day’s candlestick showed that bears are active at higher levels.
The price action of the past few days has formed a symmetrical triangle pattern, indicating that the bulls and bears are undecided about the next directional move. The 20-day EMA and the 50-day SMA ($2.47) are flat and the RSI is close to 50, indicating a balance between supply and demand.
This demand will tilt in favor of the bulls if the price turns up and breaks above the resistance line of the triangle. The ADA/USDT pair could then rally to $2.47 where the bears may again mount a stiff resistance. A break above this level could open the doors for a rally to $2.80.
Conversely, a break below the support line of the triangle could pull the price down to the 100-day SMA ($1.96).
XRP/USDT
XRP formed an inside-day candlestick pattern on Oct. 7, indicating indecision among the bulls and the bears. The bulls tried to resolve the uncertainty to the upside today but could not clear the overhead hurdle at the 50-day SMA ($1.09).
cointelegraph.com