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Bitcoin
The price of bitcoin is gradually getting out of the sideways channel. However, in order to overcome strong resistance at the level of $37,800, a rather large surge in volume is required. Only a breakout and consolidation above this level will result in a new upward wave around the $40,000 mark.
Let's analyze the current signals and consider the prospects for bitcoin.
Signals indicating bitcoin's continued rally:
The bullish indicator, showing the likelihood of further growth in bitcoin, can be attributed to the Stablecoin Supply Ratio. The SSR determines the ratio between bitcoin supply and the supply of stablecoins. The indicator decreases when the price of BTC declines or when a new amount of stablecoins is put into circulation. The fact that the SSR is so low despite the high price of BTC, indicates that traders expecting bitcoin to continue to rise in the long term have entered the market.
In addition, many of these newly issued stablecoins are on exchanges. This means that market players are ready to buy crypto assets.
According to the latest data, the distribution of bitcoins among the network participants shows that the number of bitcoin whales has increased recently, suggesting the participation of institutional investors. This is an additional medium-term signal that bitcoin is likely to continue its upward movement.
Signals indicating a decline in bitcoin
There are no signals of a strong drop in the price of bitcoin yet. All the indicators point only to a correction that we have been observing since January this year after the price reached the peak values. The number of active addresses on the Bitcoin network has dropped significantly after the price hit a new high around $40,000. This suggests that bitcoin is likely to continue losing in value, but this decline will be corrective in nature. It can be clearly seen from the trading chart that the number of active addresses is gradually recovering, although the January peak is still far away.
Technical analysis and trading tips
As I noted above, bitcoin buyers will most likely face strong resistance around $37,800 following the surge triggered by Elon Musk's #bitcoin hashtag. However, buyers are rather strong, but they will hardly be so active. If the price breaks through the level of $37,800, bitcoin will most likely rise to the $42,000 resistance area. Such an upward movement will be more speculative in nature and it will be aimed at removing bears' stop orders.
If the price falls below $33,300, the area of the moving averages, it will be possible to talk about the renewed downward pressure. Below this range, bitcoin may quickly return to the $28,900 area, where the demand for the cryptocurrency is expected to increase again.
Ether
Ether has reached a new all-time high. Now buyers need confident consolidation above the level of $1,475, which will strengthen the cryptocurrency's upward trend. The main reason for such a sharp increase in ETH was the news that Ethereum developer ConsenSys and cybersecurity firm Securosys had decided to work in partnership with a view to reaching a higher level of security in Ethereum 2.0.
Notably, about 2,877,986 ETH worth over $3.7 billion has already been blocked on the Ethereum 2.0 deposit contract. This means that users are moving to the next level and the demand for ETH will only increase.
In addition, another reason for such boosted demand for cryptocurrencies among speculators was the news that US video game retailer GameStop would accept payments in ether and other cryptocurrencies.
Interestingly, ether has greater potential for growth than bitcoin. Moreover, futures will be very attractive for institutional players. Therefore, ether will most likely continue to gain in value. At the moment when bitcoin hit the level of $40,000, many traders closed their positions and switched to ether, thereby only increasing their profit.
Technical analysis and trading tips
If ether returns and tests the $1,441 mark, it will be possible to buy the cryptocurrency at a good profit. This will ascertain that there are major players at this level. This is where we can draw the lower border of the new ascending channel, which opens the way to a new high for the cryptocurrency. If the cryptocurrency continues to trade upwards, resistance at the level of $1,555 can be seen as the nearest target. In this case, ether is likely to make a powerful rally towards the psychological level of $1,600. From this level, there may be a slight downward correction.
If there are no active purchases amid ether's decline to the support area near $1,441, traders will have to postpone long positions until the test of the $1,267 low, where there is a number of moving averages, serving as support for buyers.
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