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BTC Dominance

Technical analysis
Bitcoin could fall back to $25,000 as the US Dollar bounces. Ethereum price got rejected at ATH for the second time.
in Technical analysis
Reading Time: 5min read

Bitcoin could fall back to $25,000 as the US Dollar bounces. Ethereum price got rejected at ATH for the second time.

The price of Bitcoin has been enjoying a smooth ride to the moon as the value of the US Dollar crashes but has suffered over 30% since it created its $42,000 ATH. The US Dollar has been suffering ever since the outbreak of the Corona Virus in 2020. The Dollar index has been in a downtrend since early November after reaching its recent high, but the trend is getting exhausted as the dollar has been bouncing for the last few weeks. 

Bitcoin price has created lower highs after reaching the $42,000 ATH, and it’s yet to retest the ATH or get past it for once. The last higher low that was created was $34,888 after the $40,000 and $38,000 price was rejected last week. 

Although we are in an overall uptrend, the mini downtrend is yet to be completed as more downside looks imminent. 

Price is presently bouncing off the 50EMA on the daily chart as shown below, but a break below the 50EMA will drive the price of BTC to $25,000 or lower. 

If bears gain high momentum, the price could go back to test the 200EMA (Blue curve), testing the $19,000 before the bulls take over. 

Bitcoin reached a weekly low of $28,800 last week but the price got rejected back to the $32,000 area. Price is now testing the low again and looks like a new low will be created before the week comes to an end. 

Bitcoin is currently trading at $31,250 during the Asia market as at publishing time. 

This bearish view will invalidate if the price rebounds off the current level and breaks above $35,000. If that happens, the pair may rally to $40,000 and then to $42,000.

Institutions not interested in buying at the moment

Scott Minerd, Guggenheim’s chief investment officer, has come out with a gloomy price outlook for Bitcoin stating that there is not enough institutional demand to keep the asset over $30,000.

The chief investment officer of the financial services firm told Bloomberg Television the institutional investor base was not big enough to sustain the current prices.

“Right now, the reality of the institutional demand that would support a $35,000 price or even a $30,000 price is just not there. I don’t think the investor base is big enough and deep enough right now to support this kind of valuation.”

Minerd added that Bitcoin is still a viable asset class in the long run. Since its all-time high of $42,000 on January 8, Bitcoin has corrected 27% to current prices around $30,600. Three prominent lower highs on the chart suggest that the downtrend is strengthening.

The Guggenheim executive also thinks that this downward pressure has a lot further to go, adding that it is “not uncommon to see squeezes like this”:

“Now that we have all these small investors in the market and they see this kind of momentum trade, they see the opportunity to make money and this is exactly the sort of frothiness that you would expect as you start to approach a market pop.”

"On January 20, Minerd told CNBC that he expects prices to fully retrace back to $20,000. If this scenario plays out, it would entail a correction of more than 50%, and that has happened several times during previous market cycles. The last time BTC fell by over half was in March 2020 when it dropped from just over $10,000 to below $5,000 in just three weeks." - As reported by Cointelegraph

Ethereum got rejected for the second time

Ethereum reached a new all-time high of $1476 on Monday but the bulls have failed to hold price at the ATH for the second time. The price of ETH got rejected after it touches the ATH, leaving a wick on the daily candle as it closes below the opening price. 

Ethereum has now formed double top as price crashed from the ATH area. Ethereum crashed to $1100 area the last time it created an ATH. Price has been rejected for the second time, but the main concern for the bull is, will the support at $1100 hold this time or will ETH crash back to $900?

The price of ETH is currently trading at $1277 as at publishing time. 

On the other hand, if the bulls can sustain the current rebound, it will suggest that the bulls are buying on dips. If the bulls can push the price of ETH above the $1,400 to $1,476 resistance zone, the uptrend could resume with the next target objective at $1,600.


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Tobi Ismail

Tobi is a full time day/swing trader with 3 years’ experience in the currency and commodity market. He is interested in cryptocurrencies in combination to the current financial system. Tobi holds a bachelor's degree in Agriculture.

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