Bitcoin (BTC) bounced back above the psychological level at $50,000 and the S&P 500 hit a new all-time closing high on Dec. 23, suggesting that the panic selling caused due to the omicron variant is subsiding and the much-awaited “Santa rally” may have started.
Data from on-chain analytics firm Glassnode shows that about 100,000 Bitcoin is going from “liquid” to “illiquid” state every month, which means that the coins are being sent to addresses “with little history of spending.” This suggests accumulation by investors.
In another sign that investors are not dumping their coins on small corrections, data from CryptoRank shows that the total Bitcoin on crypto exchanges has dropped from 9.5% of the total Bitcoin supply in October 2020 to 6.3% of the supply in December of this year, which is the lowest level in 2021.
Is the current recovery the start of a new uptrend or is this just a dead cat bounce that will be sold into? Let’s study the charts of the top-10 cryptocurrencies to find out.
Bitcoin broke and closed above the 20-day exponential moving average ($49,720) on Dec. 23, indicating that the sellers may be losing their grip. The flattening 20-day EMA and the relative strength index (RSI) near the midpoint suggest a possible change in the short-term trend.
The recovery could rise to the 38.2% Fibonacci retracement level at $52,314 and then to the 50% retracement level at $55,560. The bears are likely to mount a strong resistance in this zone. If the price turns down from this zone, the bears will again try to resume the downtrend.
A break and close below the strong support zone at $45,000 to $42,000 could open the doors for a possible decline to $30,000. On the other hand, if buyers drive the price above $55,560, the BTC/USDT pair could rise to the 61.8% Fibonacci retracement level at $58,686. A break and close above this level will improve the prospects of a retest of the all-time high.
Ether (ETH) broke and closed above the descending channel and the 20-day EMA ($4,060) on Dec. 23, which is the first indication that the correction may be ending.
If buyers sustain the price above the 20-day EMA, the bullish momentum could pick up and the ETH/USDT pair could rise to $4,488. This level may again act as a strong resistance but if bulls push the price above it, the pair could retest the all-time high at $4,868.
The 20-day EMA is flattening out and the RSI is near the midpoint, suggesting that bulls are attempting a comeback.
However, if the price turns down and breaks back into the channel, it will suggest that the current breakout was a bull trap. The pair could then drop to $3,643.73. A break and close below this support could result in a decline to the 200-day simple moving average ($3,316).
Binance Coin (BNB) has recovered to the downtrend line, which could act as a strong resistance. If the price turns down from the current level, it will suggest that traders continue to sell on rallies.
The bears will now attempt to pull the price down to the strong support zone at $500 to $489.20. If this zone crumbles, the decline could extend to the 200-day SMA ($439) where buyers are likely to step in and provide support.
Contrary to this assumption, if bulls drive and sustain the price above the downtrend line, it will suggest that the correction could be over. The buyers will then attempt to resume the up-move, which may face resistance at $575 and later at $617.
After trading close to the 20-day EMA ($184) for the past few days, Solana (SOL) broke and closed above the resistance on Dec. 23. The 20-day EMA has flattened out and the RSI is close to the midpoint, suggesting a balance between supply and demand.
This balance will tilt in favor of the bulls if the price sustains above the 20-day EMA. Such a move will indicate that the short-term corrective phase may be ending. The SOL/USDT pair could first rise to $204.10 and then to $240.
Conversely, if the price turns down and sinks below $168.49, it will suggest that bears continue to sell on rallies. The pair could then drop to $148.04. If this level also cracks, the pair could slump to the 200-day SMA ($123).
Cardano (ADA) jumped above the 20-day EMA ($1.37) on Dec. 23, indicating that buyers are attempting a comeback. However, the bears are unlikely to give up easily and will attempt to pull the price back below the 20-day EMA.
If they succeed, it will suggest that the sentiment remains negative and traders are selling on rallies. The ADA/USDT pair could then drop to the strong support at $1.18. A break and close below this level could sink the pair to $1.
Alternatively, if the price rebounds off the 20-day EMA, it will suggest that the sentiment has turned bullish and traders are buying on dips. The bulls will then attempt to push the price to the overhead resistance at $1.87.
XRP broke and closed above the 200-day SMA ($0.94) on Dec. 22, indicating that the sellers may be losing their grip. The bears are currently attempting to stall the recovery near the psychological mark at $1.
If bulls do not allow the price to slip back below the moving average, it will indicate that traders are buying the dips. That will increase the possibility of a break above $1. If that happens, the XRP/USDT pair could rise to $1.20 and later reach the stiff overhead resistance at $1.41.
Contrary to this assumption, if the price breaks back below the moving averages, it will suggest that traders are selling near the stiff overhead resistance level. This could keep the pair stuck inside a large range between $0.75 and $1.
Terra’s LUNA token turned down from $98.20 on Dec. 22 indicating that bears are defending the psychological resistance at $100. However, the bulls had other plans as they bought the dip and resumed the up-move on Dec. 23.
The rising 20-day EMA ($74) and the RSI in the overbought zone indicate a buyers’ advantage. If bulls sustain the price above $100, the LUNA/USDT pair could start the next leg of the uptrend. The next target objective on the upside is $124.65 and then $150.
Alternatively, if the price turns down from the current level, it will suggest that bears continue to pose a stiff challenge at $100. The selling could intensify if the price plummets below the 20-day EMA. The pair could then drop to $50.
Avalanche (AVAX) has been facing resistance in the zone between the 61.8% Fibonacci retracement level at $119.69 and the 78.6% retracement level at $131.70, but a minor positive is that bulls have not given up much ground.
The rising 20-day EMA ($107) and the RSI in the positive territory suggest that the path of least resistance is to the upside. If bulls drive the price above $131.70, the AVAX/USDT pair could retest the all-time high at $147.
On the contrary, if the price turns down from the current level or the overhead resistance and breaks below the 20-day EMA, it will suggest that demand dries up at higher levels. The pair could then drop to $98.14. If this level cracks, the next stop could be $75.50.
Polkadot (DOT) rebounded off the strong support zone at $25 to $22.66 on Dec. 20 and the bulls pushed the price above the moving averages on Dec. 23.
If buyers sustain the price above the moving averages, the DOT/USDT pair could rise to $31.49 where the bears may mount stiff resistance.
If the price turns down from this level but rebounds off the moving averages, it will suggest a change in sentiment from sell on rallies to buy on dips. That could open the doors for a possible rally to $39.35.
This positive view will invalidate if the price turns down from the current level and breaks below the 20-day EMA ($28.42). That could pull the pair down to the support zone.
Dogecoin’s (DOGE) rebound off the strong support at $0.15 has risen above the 20-day EMA ($0.18). This suggests that the bears may be losing their grip.
The buyers will now try to propel the price above the overhead resistance at $0.19. If they succeed, the DOGE/USDT pair could rally to $0.22 and then to the 200-day SMA ($0.23). The bears are likely to defend this zone with vigor.
On the other hand, if the price turns down from $0.19, the pair could again drop toward $0.15 and remain range-bound between these two levels for a few more days. The bears will have to sink and sustain the price below $0.15 to start the next leg of the downtrend.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Market data is provided by HitBTC exchange.
Ray Schuetz received a Masters Degree in computer science from The University of Texas (Austin). Ray has been working as a full-time blockchain consultant for the past 3 years. In his spare time, Ray enjoys writing for EthereumCryptocurrency.com and other crypto news publications.