Focus Remains On Crypto as Bitcoin Reaches a New High

Many participants in crypto markets expect the incoming Trump administration to be broadly very positive for cryptocurrencies due to decreased regulation and general expressions of support for cryptocurrencies from Mr Trump. This article summarises recent influences on crypto markets, primarily bitcoin, then looks briefly at movements on the charts of BTCUSD and ETHUSD.

A main factor behind the forcefulness of bitcoin’s current gains has been strong inflows into futures:

Open interest above 38,000 since 11 November and 8 November’s volume of nearly 35,000 are some of the highest figures ever recorded. These numbers would usually suggest an ongoing uptrend, but in the immediate future they could also hint at possible overheating and a retracement or consolidation before a serious test of the magic $100,000.

Sentiment on the whole is overwhelmingly positive:

The Fear and Greed Index’s current 88 indicates extreme greed, which is often a signal for profit-taking and at least a pause for breath. That’s questionable now, though, with the price so close to such an important round number and beyond previous highs. Recent data on HODLing suggest that large movements might continue:

The one-year HODL wave recently reached a new low for 2024 around 64%. More bitcoins moving around means that it’s easier for the price to move, other things being equal. In turn, that makes it likely for upcoming movements to be more volatile than the norm earlier this year. However, the HODL wave doesn’t necessarily tell us which direction the price might go.

Ultimately, this is uncharted territory for bitcoin. With all previously established resistances having been broken and significantly greater institutional involvement compared to previous bull runs, it’s harder to predict the next resistance reliably. However, it’s also less likely to see a crash or large correction now compared to 2017 or 2022.

Traders are looking for details on likely policies by the incoming American government. How volume and open interest for futures perform in the next few weeks is also critical: if these continue to be very high, more gains seem likely, while if they drop one would normally expect a retracement or correction.

Bitcoin’s Still on Track to Reach $100,000

Rather than retracing after the clear result of the American presidential election or after 11 November’s strong gain, bitcoin has continued upward amid high volume. The next obvious target is $100,000, which is likely to be a key resistance.

Here the Fibonacci extensions are vaguer areas than usual due to the large movements they’re based on. The first weekly extension, 61.8%, appears slightly below $87,000, but this is drawn based on weekly opening and closing; basing it on intraday or closing lows from January 2023 and equivalent highs from March 2024 could yield different placements between $85,000 and about $92,000. That makes the task of finding an appropriate stop as a new buyer here much more difficult.

The price is extremely strongly overbought based on the slow stochastic and Bollinger Bands, but this is a pretty normal situation for a cryptocurrency in a clear bull run. This phase of the uptrend isn’t very mature yet, so the 100 SMA is still in the process of golden crossing the 200.

$72,000 is the only clear potential support at the moment, but it’s quite a long way down to reach there especially with such feverish enthusiasm among many buyers. Equally, that area offered minimal resistance in the aftermath of the elections. Overall, the utility of the chart and indicators in the situation is questionable when sentiment is so strong.

When’s Ether’s Chance to Shine?

Ether and various other major altcoins have followed bitcoin’s recent move up to differing degrees. Positivity comes from futures, likely crypto-friendliness from the incoming American government and the prospect of looser monetary policy in the USA, while important unique factors in favour of Ether particularly include a much lower price than bitcoin and a large distance remaining before the previous all-time high.

The next likely strong resistance is the area of July’s highs around $3,500. Overbought isn’t usually a key factor for a cryptocurrency under these conditions of strongly positive sentiment, but there hasn’t been such a visible jump in volume for Ether compared to bitcoin.

The 200 SMA has been decisively broken for now as a dynamic resistance and might flip to being a dynamic support instead, being only slightly below the psychological area of $3,000, so for some new buyers Ether seems more appealing because finding a decent stop looks a lot easier compared to bitcoin. However, many of the same caveats for buyers apply here as with bitcoin: sentiment can change very quickly and higher liquidity can make downward as well as upward movements faster and less predictable.

This article was submitted by Michael Stark, an analyst at ExnessExness.ExnessExness

The opinions in this article are personal to the writer. They do not reflect those of Exness or FX Empire.