Cryptocurrency markets appear to be losing some of their recent bullish momentum, but a favorable tailwind from equity markets could catalyze a breakout in Bitcoin and certain altcoins.
It is the last month of the year and analysts have already released their projections for next year. In a note to investors, Standard Chartered suggested that “Financial Market Surprises of 2023” will include the price of Bitcoin (BTC) crashing to $5,000 sometime this year. The fall will be triggered by a liquidity crisis, which could lead to more bankruptcies and a drop in investor confidence in the cryptocurrency sector.
If this feels like an extreme, venture capitalist Tim Draper went in the opposite direction, predicting that Bitcoin could skyrocket to $250,000 by mid-2023. While speaking to CNBC, Draper said that Bitcoin’s massive rally is likely to be driven by increased participation of
In the short term, analysts remain divided on the prospects for a Bitcoin rally. While some analysts expect a Christmas rally to push Bitcoin to $19,000, others are not so optimistic.
Could the S&P 500 Index (SPX) witness short-term profit booking? Is the US Dollar Index (DXY) Ripe for a Recovery? What is the effect of these two asset classes on cryptocurrencies? Let’s study the graphs to find out.
SPX
The S&P 500 Index rallied from the 20-day exponential moving average (3,967) on November 30, indicating that bulls continue to view dips as a buying opportunity.
The price reached the downtrend line on December 1, but the bulls failed to break through this resistance. This indicates that the downtrend line is likely to act as formidable resistance. The price could swing between the downtrend line and the 20 day EMA for a few days.
The rising 20 day EMA and the RSI in the positive territory indicate that the path of least resistance is to the upside.
If the price closes above the downtrend line, the bullish momentum could build further and the index could rally to 4,300.
This positive view could be invalidated in the short term if the price turns down and breaks below the 20 day EMA. That could take the index to the 50-day simple moving average (3,818).
DXY
The relief rally in the US dollar index (DXY) faded at the 20-day EMA (107) on November 30. This shows that sentiment has turned bearish and traders are selling rallies towards the 20 day EMA.
The bears pushed the price below the strong support at 105 on Dec 1 and thwarted the bulls’ attempts to push the price above 105 on Dec 2. Although the moving averages down and the RSI in negative territory indicate an advantage for the bears, they were unable to capitalize on the collapse and resume the downtrend.
Buyers have pushed the price above 105 on December 5th. If the bulls hold the price above this level, the index could rally to the 20 day EMA. This level could again act as a barrier, but if the bulls catapult the price above it, the index could rally to 108.
BTC/USDT
After trading near the 20-day EMA ($16,979) for the past four days, Bitcoin attempted to rally on Dec. 5. However, the long wick on the day’s candle suggests selling at higher levels.
The bears are expected to vigorously defend the upper zone between $17,622 and the 50-day SMA ($18,223). If the price turns down from the area but does not break below the 20 day EMA, it will suggest that traders are buying on the dips. That could increase the likelihood of a rally to $20,000 and then $21,500.
Alternatively, if the price turns down from the overhead resistance and plummets below the 20-day EMA, it will suggest that the BTC/USDT pair could stay range bound between $15,476 and $18,200 for a few days.
ETH/USDT
The bears tried to plunge Ether (ETH) below the 20-day EMA ($1,251) on Dec. 3, but the bulls held their ground. This suggests that the buyers are aggressively defending the 20 day EMA.
The 20 day EMA has started to gradually turn up and the RSI is just above the midpoint, which indicates that the bulls have a slight advantage. This improves the prospects for a break above the 50-day SMA ($1,334).
If that happens, the ETH/USDT pair could pick up momentum and rally to the resistance line of the descending channel, which could act as a major hurdle.
On the downside, a break and close below $1,236 could suggest that the bears are trying to come back. Then the pair could slide to $1,150.
BNB/USDT
The price of (BNB) has been trading near the moving averages for the past three days. This indicates a fight between the bulls and the bears to win the game.
The flat moving averages and the RSI near the midpoint do not give a clear advantage to either the bulls or the bears. Buyers will have to push and hold the price above $300 to signal strength. The BNB/USDT pair could rally to $318 and then $338.
Conversely, if the price turns down and falls below $285, the selling could intensify and the pair could drop to $275. There is minor support at this level, but if it doesn’t hold, the fall could extend to vital support. of USD 250.
XRP/USDT
XRP (XRP) is facing resistance at $0.41 but finds support at the uptrend line. The price action of the past few days has formed an ascending triangle pattern, which will complete on a breakout and close above $0.41.
If that happens, it will suggest a possible trend reversal and the XRP/USDT pair could start a move higher to $0.45 and then $0.51.
Alternatively, if the price turns down and breaks below the uptrend line, it will invalidate the bullish setup. That could sink the price to $0.37 and then $0.34. Such a move will suggest that the pair may extend its stay within the wide range between $0.30 and $0.41 for a few more days.
The flat 20 day EMA and the RSI near the midpoint also suggest a short-term consolidation.
ADA/USDT
Cardano (ADA) broke above the 20-day EMA ($0.32) on Dec. 5, but the bulls were unable to hold the higher levels. This suggests that the bears are selling on relief rallies.
For the rally to strengthen further, the bulls will have to hold the price above the 20 day EMA. The ADA/USDT pair could then rally to the 50-day SMA ($0.35) and the downtrend line thereafter. This level may offer strong resistance to bulls.
The 20 day EMA has flattened out and the RSI is just below the midpoint, which suggests range bound action in the near term. The bears will have to sink the price below $0.29 to signal the resumption of the downtrend.
DOGE/USDT
Dogecoin (DOGE) rally broke above the $0.10 38.2% Fibonacci retracement level and reached near the $0.11 50% retracement level.
The long wick on the Dec 5 candle shows that the bears are defending the zone between the 50% retracement to $0.11 and the 61.8% retracement to $0.13. The first support line to watch on the downside is the 20-day EMA ($0.09).
A strong bounce from this level will suggest that the lower levels are attracting buyers, and that could increase the possibility of a rally above $0.13. The pair could then complete a 100% retracement and rally to $0.16.
This bullish view could be negated if the price turns down and falls below the moving averages.
MATIC/USDT
Polygon (MATIC) bounced off the 20-day EMA ($0.90) on Dec. 4, indicating that the bulls are trying to turn the level into support.
The 20 day EMA has started to turn higher, and the RSI is just above the midpoint, which indicates that the buyers have a slight advantage. There is minor resistance at $0.97 but it is likely to be crossed. The MATIC/USDT pair could rally to $1.05 where the bears may try to stop the rally.
If the price turns down from $1.05, the pair could drop back to the 20-day EMA. A strong bounce could improve the chances of a break above $1.05. Conversely, a break below the moving averages could pave the way for a drop towards the uptrend line.
DOT/USDT
Polkadot (DOT) broke above the 20-day EMA ($5.54) on Dec. 2 and the bulls successfully defended the retest on Dec. 3. Buyers tried to push the price to the 50-day SMA ($5.92) on Dec. 5, but it found significant resistance at higher levels.
The 20 day EMA has flattened out and the RSI has risen to the midpoint, indicating that the downside momentum is weakening. This increases the possibility of a break above the 50-day SMA. If this level is crossed, the DOT/USDT pair could rally to the downtrend line. This level is likely to act as a major hurdle for the bulls.
On the other hand, if the price turns down and breaks below the 20-day EMA, the pair could drop to $5.30, and then $5.
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