Bitcoin, Ethereum and select altcoins set to resume rally despite February slump
Bitcoin and select altcoins such as ETH, OKB, ALGO, and THETA may extend their up-move after a brief correction.
After the impressive rally in January, Bitcoin (BTC) seems to be taking a breather in February. This is a positive sign because vertical rallies are rarely sustainable. A minor dip could shake out the nervous longs and provide an opportunity for long-term investors to add to their positions.
Has Bitcoin price bottomed?
The opinion remains divided, however, on whether Bitcoin has bottomed out or not. Some analysts expect the rally to reverse direction and nosedive below the November low while others believe the markets will continue to move up and frustrate the traders who are waiting to buy at lower levels.
In an interview with Cointelegraph, Morgan Creek Capital Management founder and CEO Mark Yusko said “the crypto summer” could begin as early as the second quarter of this year.
He expects risk assets to turn bullish if the United States Federal Reserve signals that it will slow down or pause interest rate hikes. Another potential bullish catalyst for Bitcoin is the block reward halving in 2024.
Could the altcoins continue their up-move while Bitcoin consolidates in the near term? Let’s study the charts of Bitcoin and select altcoins that may outperform in the next few days.
Bitcoin has been gradually correcting since hitting $24,255 on Feb. 2. This indicates profit booking by short-term traders. The price is nearing the strong support zone between $22,800 and $22,292. The 20-day exponential moving average ($22,436) is also located in this zone, hence the buyers are expected to defend the zone with all their might.
The upsloping 20-day EMA and the relative strength index (RSI) in the positive territory indicate that bulls have the edge. If the price turns up from the support zone, the bulls will again attempt to catapult the BTC/USDT pair to $25,000. This level should act as a formidable resistance.
On the downside, a break below the support zone could trigger several stop losses and that may start a deeper pullback. The pair could first drop to $21,480 and if this support also fails to hold up, the next stop may be the 50-day simple moving average ($19,572).
The 4-hour chart shows that the price is trading inside an ascending channel but the RSI has been forming a negative divergence. This suggests that the bullish momentum may be weakening. A break and close below the channel could tilt the short-term advantage in favor of the bears. The pair could then fall toward $21,480.
Alternatively, if the price rebounds off the support line of the channel, the bulls will again attempt to kick the pair above the channel. If they manage to do that, the pair may resume its uptrend.
Ether (ETH) has been trading near the $1,680 resistance for the past few days. Usually, a tight consolidation near an overhead resistance resolves to the upside.
While the upsloping 20-day EMA ($1,586) indicates advantage to buyers, the negative divergence on the RSI suggests that the bulls may be losing their grip. If bulls want to assert their dominance, they will have to propel and sustain the price above $1,680.
If they do that, the ETH/USDT pair may rally to $1,800. This level may again act as a resistance but if bulls do not allow the price to dip below $1,680, the rally may stretch to $2,000.
Instead, if the price turns down and plummets below the 20-day EMA, the ETH/USDT pair could tumble to $1,500. This is an important support level to monitor because a bounce here could keep the pair range-bound between $1,500 and $1,680. On the other hand, if the $1,500 support cracks, the pair may dive to $1,352.
The 4-hour chart shows that the bears have pulled the price below the 20-EMA. This is the first indication that the bulls may take a step back. There is a minor support at the 50-SMA but if it fails to hold, the pair may slide to $1,550 and then to $1,500.
Conversely, if the price turns up from the moving averages, the bulls will again attempt to thrust the pair above the overhead resistance. If they succeed, the pair may resume the uptrend.
While most cryptocurrencies are well below their all-time high, OKB (OKB) hit a new high on Feb. 5. This suggests that bulls are in command.
Some traders may book profits near the overhead resistance of $44.35 as it may act as a formidable resistance. If the price turns down from the current level but rebounds off the 20-day EMA ($37), it will suggest that bulls continue to buy the dips.
That could increase the possibility of a break above $45. The OKB/USDT pair could first skyrocket to $50 and thereafter to $58.
If the price turns down and breaks below the 20-day EMA, it will indicate that the traders may be rushing to the exit. The pair could then drop to $34 and later to the 50-day SMA ($30).
The 4-hour chart shows that the bears are trying to protect the $44.35 level. The pair could turn down and reach the moving averages, which is an important support to keep an eye on. If the price bounces off the moving averages, the bulls will again try to overcome the barrier at $45 and start the next leg of the uptrend.
Contrarily, if the price breaks below the 50-SMA, the selling could intensify and the pair may slump to $36 and then to $34. Such a move could delay the resumption of the uptrend.
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Algorand’s (ALGO) recovery reached the breakdown level of $0.27 on Feb. 3. The bears defended this level but the bulls have not given up much ground. This suggests that the bulls expect the relief rally to continue.
The upsloping 20-day EMA ($0.24) and the RSI in the positive territory indicate that bulls have the upper hand. If the price turns up from the 20-day EMA, the likelihood of a break above $0.27 increases. The ALGO/USDT pair could then travel to $0.31 where the bears may try to offer strong resistance.
If the price turns down from this level but bounces off $0.27, it will suggest that the downtrend could be over in the short term. The pair could then attempt a rally to $0.38.
This positive view could invalidate in the near term if the pair turns down from the current level and slides below $0.23. The pair could then dive to the 50-day SMA ($0.21).
The 4-hour chart shows that the bears are guarding the $0.27 level but a minor positive is that the bulls have not allowed the price to stay below the 50-SMA. If the price turns up from the current level, the bulls will again try to clear the overhead hurdle. If they do that, the pair could pick up momentum and surge toward $0.31.
Contrary to this assumption, if the price continues and breaks below the moving averages, the pair risks a drop to $0.23. The bears will have to smash this support to gain the upper hand.
Theta Network (THETA) successfully completed a retest of the breakout level on Feb. 1, indicating that bulls have flipped the downtrend line into support.
The bulls will try to push the price to the overhead resistance at $1.20. This level may act as a minor hurdle but if bulls do not give up much ground from $1.20, the THETA/USDT pair could extend its up-move to $1.34. This is an important level for the bears to defend because if this resistance crumbles, the pair could soar to $1.65.
If bears want to stop the bulls, they will have to quickly pull the price back below the 20-day EMA. The pair could then fall to $0.97 and later to the 50-day SMA ($0.89).
The pair bounced off the $0.97 level, which becomes an important level to watch out for on the downside. A breach of this level is likely to tilt the advantage in favor of the bears and open the doors for a possible drop to $0.85.
The rally is facing resistance near $1.20 but the upsloping 20-EMA and the RSI in the positive territory indicate that the path of least resistance is to the upside. If buyers push the price above $1.20, the momentum should pick up for a rally toward $1.34.