Top 5 Cryptocurrencies Long: Bitcoin and the crypto universe are going through one of the toughest periods as the world battles the coronavirus pandemic. The central banks and governments are trying to support the economy by announcing several easing measures.
While this has improved sentiment in the short-term, it could reduce the value of fiat currencies in the long-term. In a recent interview, Bridgewater Associates co-chairman and co-CIO Ray Dalio said that he does “not think that cash is a safe investment.”
Barring the panic selling on March 12, Bitcoin has held up quite well in 2020. This shows that long-term investors are unruffled about the current crisis and are holding out as they expect the price to rise in the future. When a nascent asset class proves itself during a major crisis, it is likely to attract the attention of the institutional investors.
Bitcoin is a volatile asset, hence, analysts sometimes project targets that are either sky-high or highly depressed. BitMEX CEO Arthur Hayes and a pseudonymous trader who’s known as “Crypto Capo” both expect Bitcoin to drop to $3,000 levels or lower. Hayes believes that the US equity markets will roll over and resume their downtrend, which could result in another round of panic selling in Bitcoin.
While anything is possible during times of panic, we believe that cryptocurrencies are unlikely to hit new yearly lows even if the US equity markets decline. Let’s look at the weekly charts of the top five cryptocurrencies to determine their long-term trend.
Bitcoin’s (BTC) weekly chart shows that the price has been trading inside a large symmetrical triangle. The breakout or breakdown of this triangle will start the next directional move, which is likely to last for a few months.
In mid-March of this year, the BTC/USD pair dropped below the support line of the symmetrical triangle. Though this breakdown was a negative sign, the bears could not capitalize on the move and drag prices lower. This suggests a lack of sellers at lower levels.
The bulls quickly pushed the price back into the triangle, which is likely to have trapped a few aggressive bears. This led to a quick recovery in the following weeks. However, the bulls are currently facing resistance at the 20-week exponential moving average ($7,724).
We also spot a bearish rising wedge, which will complete if the pair breaks below $6,400. Such a move could result in a retest of the support line of the symmetrical triangle.
The 20-week EMA has started to slope down marginally, which suggests that the bears might have a slight edge in the short-term. Since the pair topped out closer to $14,000 levels in June of last year, the Relative Strength Index has not been able to scale above the 60 level, which suggests weakness.
However, if the bulls can propel the price above the wedge at $7,700, a rally to the 50-week simple moving average ($8,676) is possible. A break above this level can push the price to the resistance line of the symmetrical triangle at $10,500.
A breakout of the triangle will start a new uptrend that is likely to rise to $14,000 and then retest the lifetime highs. Contrary to our assumption, if the bears sink the pair below the support line of the symmetrical triangle, it will be a huge negative. However, we give this a low probability of occurring.
Ether (ETH) has largely been range-bound between $84.25 and $366 for about 18 months. Such a long consolidation, after a sharp decline, usually indicates a bottoming process. The best way to trade such a large range is to buy the dips to the support ($84.25) of the range and close the position near the resistance ($366).
Recently, the ETH/USD pair dropped close to the support of the range, which was bought by the bulls. This is a positive sign as it shows that the bulls are aggressively defending the key support levels. The relief rally from the lows is facing resistance at the 20-week EMA ($171), which is sloping down gradually.
Any dip from the current levels is likely to find support at $117.09 and below it at $84.25. We like that the RSI held the 40 levels during the recent decline. This has formed a bullish divergence, which is a positive sign.
If the bulls can drive the pair above the 20-week EMA and the 50-week SMA ($193.54), a rally to $288.599 and above it to $366 is possible. A breakout of the range will be a huge positive as it will start a new uptrend that is likely to reach $647.74 and above it $800.
Our bullish view will be invalidated if the next dip slides and sustains below $84.25. Such a move will be a huge negative.
XRP has been in a long-term downtrend. It has consistently been making lower highs and lower lows for more than two years. This shows that the investors use the rallies to lighten up their holdings, which is a bearish sign.
On the downside, the $0.22255 support had held until late last year. Though the bulls purchased the first dip below this level in Dec., they could not sustain the higher levels. As a result, the XRP/USD pair again plunged to new multi-year lows recently.
Both moving averages are sloping down and the RSI is in the negative territory, which suggests that the advantage is with the bears.
The bulls are currently attempting to push the price back above the overhead resistance of $0.22255. The 20-week EMA ($0.21752) is also close to this level, hence, we anticipate the bears to defend this level aggressively.
If the pair turns down from this overhead resistance, the bears will try to resume the downtrend by sinking the price below the recent low of $0.114. If successful, it will be a huge negative.
On the other hand, if the bulls can push the price above $0.22255, a move to the 50-week SMA at $0.27730 is possible. The downtrend line is also close to this level, which is likely to act as a major hurdle for the bulls.
The traders can wait for a higher high and a higher low formation to complete before turning positive on the pair.
Bitcoin Cash (BCH) has been trading inside a wide range of $166-$515.35 for about a year. During this period, the price has touched the resistance and the support of the range two times each. This shows that the range is well defined.
The bears had recently plunged the BCH/USD pair below the support at $166, however, they could not sustain the lower levels. This is a bullish sign as it would have trapped a few aggressive bears.
The price quickly re-entered the range but the relief rally is facing stiff resistance at the moving averages. Even between July and Dec. of last year, the moving averages had acted as a strong barrier.
Therefore, the bulls need to push the price above the 50-week SMA ($303.19) to increase the possibility of a rally to $515.35. A breakout of the range will be a huge positive as it has a target objective of $864.70.
However, if the price turns down from the current levels and plummets below $166, the bears will attempt to drag it below the recent low of $141.11. If successful, it will be a huge negative as it could start a new downtrend.
Bitcoin SV (BSV) had been stuck in a range of $254.13 and $38.8528 for more than a year. In January of this year, the altcoin broke out of the range and surged to new highs. The target objective of a breakout of the range was $469.4072 and BSV reversed direction from $458.74.
The bulls bought the dip to $254.13, which was now acting as a support. However, the failure to break out to new highs attracted another round of selling that dragged the BSV/USD pair to a low of $82.771.
The subsequent relief rally reached $227, which is just below the 50% Fibonacci retracement of the most recent decline. This shows that the pair might now remain stuck in a range between $254.13 on the upside and $77 on the downside.
Both the moving averages have flattened out and the RSI is close to the midpoint, which suggests a balance between both buyers and sellers.
The balance will tilt in favor of the bulls if they can propel the price above $254.13. Above this level, a rally to $382.47 is possible. Though $268.842 and $319.424 might act as resistance, we expect these levels to be crossed.
Alternatively, a break below $77 will shift the advantage in favor of the bears. Below this level, a retest of the low at $38.8528 is likely. The best way to trade the range is to buy the bounce off the support or wait for the price to break out of it.
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.
The market data is provided by the HitBTC exchange.