Data shows that whales and institutional investors accumulated Bitcoin throughout its 2-year long bearish phase, should retail investors follow?
Data from CoinMetrics shows that crypto whales now hold 42.1% of Bitcoin’s current supply. This is a slight increase compared to 37.9% two years back and analysts have interpreted the increase as a positive sign, as it shows large investors have been accumulating Bitcoin during its bear phase. There is, however, no major change in the top 1,000 addresses, as their holdings only inched up from 34.4% at the end of 2017 to 34.8%, according to Flipside.
While retail traders have been worried about picking a bottom, large investors are looking at the possible upside to be attained over the next few years. Mark Yusko, the chief executive and chief investment officer at Morgan Creek Capital Management, anticipates Bitcoin to rally to $100,000 by 2021 and to $250,000 by 2025. By 2030, Yusko expects Bitcoin to reach “gold equivalence” and rise to $400,000 or $500,000.
Daily cryptocurrency market performance. Source: Coin360
Major financial firms have recognized the increasing demand from institutional investors and have been working towards offering custody and other services for cryptocurrencies. The latest to join the bandwagon is Amsterdam-based bank ING, which is reportedly in the early stages of developing cryptocurrency custody technology.
With increasing institutional involvement, should retail investors also jump in and buy at the current levels or could the prices fall further and provide a better entry point later? Let’s analyze the charts to find out.
The bulls have been defending the immediate support at $7,085.80 for the past two days but have failed to secure a sharp bounce off it. This shows hesitation among the bulls to buy aggressively at these levels. However, if the bears fail to sink Bitcoin (BTC) below $7,085.80 within the next few days, we anticipate buying to pick up.
BTC USD daily chart. Source: Tradingview
The first sign of strength would be a close (UTC time) above the 20-day EMA. Above this level, a move to $7,856.76 is likely. If the bulls can scale above this resistance, a rally to the downtrend line is possible.
We expect that the bears will mount a stiff resistance at the downtrend line but if the bulls can propel the price above it, the BTC/USD pair could move up to $10,360.89. Therefore, we retain the buy recommended in our earlier analysis.
On the other hand, if the recovery attempt from the current level fizzles out at the 20-day EMA, the bears will make another attempt to break below $7,085. If successful, a drop to $6,512.01 will be on the cards.
Ether (ETH) dipped below the support at $143.259 on Dec. 12 but managed to recover and close (UTC time) above it. This shows buying at lower levels. The bulls will now try to push the price to the overhead resistance zone of $151.829 to $157.50.
ETH USD daily chart. Source: Tradingview
A breakout of the resistance zone can propel the altcoin to $173.841 and above it to $197.75. Traders can attempt to ride this move by initiating long positions as suggested in our earlier analysis.
However, if the bounce from the current levels fails to find buyers above the resistance zone, the bears will make another attempt to sink the price below $143.259. If successful, the ETH/USD pair might drop to $131.484.
Although XRP slipped below the first support at $0.22 on Dec. 12, the bulls defended the next support at $0.20946. Currently, the bulls are trying to push the price back above the uptrend line of the ascending triangle and $0.22. If successful, a move to the 20-day EMA and above it to $0.23260 is possible.
XRP USD daily chart. Source: Tradingview
A breakout of $0.23260 will be the first indication that the buyers are making a comeback. We would wait for the price to sustain above $0.23260 before suggesting a trade in it.
Nonetheless, if the bulls fail to propel the price above the 20-day EMA, the bears will again attempt to sink the price below $0.20946. If successful, a drop to $0.20041 is possible.
Bitcoin Cash (BCH) has been trading close to the $203.36 support for the past three days. The failure of the bears to sink the price below it shows that the selling pressure is waning. We now expect the bulls to push the price to the 20-day EMA.
BCH USD daily chart. Source: Tradingview
A breakout of the 20-day EMA could carry the price to $227.01. If the bulls succeed in pushing the price above this resistance, the BCH/USD pair might start a rally to $306.78. Therefore, traders can attempt a long position above $227.01 as suggested in our earlier analysis.
On the other hand, if the bulls fail to carry the price above the 20-day EMA, a break below $203.36 is likely. The next support on the downside is $192.52, below which the downtrend will resume.
Litecoin (LTC) made a doji candlestick pattern near the support of $42.0599 on Dec. 12, which shows indecision among bulls and bears. If the bears sink the price below the support, a drop to $36 is possible.
LTC USD daily chart. Source: Tradingview
Conversely, if the bulls manage to push the price above the small downtrend line and the 20-day EMA, a range-bound action between $50 and $42.0599 will ensue.
We spot a possible bullish divergence on the RSI, which is a positive sign. The LTC/USD pair could pick up momentum above $50. Therefore, traders can buy on a close (UTC time) above $50 with a stop loss below $42. The target objective is a rally to $66.
Although EOS dipped below the support at $2.5804 for the past two days, the bears have not managed to close (UTC time) below it. This shows buying at lower levels. The bulls will now try to push the price above the 20-day EMA. If successful, the range-bound action between $2.5804 to $2.5695 is likely to continue for a few more days.
EOS USD daily chart. Source: Tradingview
A breakout of $2.8695 will be the first sign of strength. Above this level, a rally to the downtrend line and above it to $3.69 is possible. The short-term traders can ride this up move as suggested in our earlier analysis.
Contrary to our assumption, if the EOS/USD pair turns down from the current levels or the 20-day EMA and plummets below $2.5804, a drop to $2.4001 is possible.
Binance Coin (BNB) bounced off the support at $14.2555 on Dec.12 but the bounce has been shallow, which suggests a lack of aggressive buying at these levels. We anticipate the bears to again attempt a breakdown of the support. If successful, a drop to $11.30 is possible.
BNB USD daily chart. Source: Tradingview
Conversely, if the bulls can carry the price above the 20-day EMA, the BNB/USD pair might remain range-bound for a few more days. A break above $16.50 will be the first indication that the buyers are back in the game. Above this level, a rally to $21.80 is likely.
As the risk to reward ratio is attractive, we retain the buy recommendation given in the previous analysis. The bullish divergence on the RSI is the only positive setup on the chart.
Bitcoin SV (BSV) is struggling to stay above the support at $92.693. This shows a lack of buyers even at these levels because they are not confident that a bottom is in place yet. If the price does not rise above the 20-day EMA within the next few days, the possibility of a breakdown to $78.506 increases.
BSV USD daily chart. Source: Tradingview
However, if the BSV/USD pair bounces off the current levels and rises above the 20-day EMA, a move to $113.960 is possible. The pair might consolidate in this range for a few days and pick up momentum on a breakout and close (UTC time) above $113.960. We would wait for a new buy setup to form or the price to sustain above the 50-day SMA before proposing a trade in it.
Tezos (XTZ) rebounded sharply from the 20-day EMA on Dec. 12, which shows that the sentiment is to buy the dips. We anticipate the bulls to face a minor resistance at $1.6555 but as the momentum is strong, a move to $1.85 is likely.
XTZ USD daily chart. Source: Tradingview
Previously, the rallies have turned down from close to $1.85, hence, we anticipate the bears to mount a stiff resistance at this level. If the price turns down from $1.85 once again, we expect the buyers to step in at $1.65 and below it at the 20-day EMA.
Contrary to our assumption, if the bulls propel the price above $1.85, it will signal a major bottom and the next target could be $2.95. We remain bullish and would suggest a trade if we find a buy setup with an attractive risk to reward ratio.
The bulls are attempting to defend the support at $0.051014 but the failure to achieve a strong bounce is likely to attract further selling. If the bears break below the support at $0.051014, Stellar (XLM) could drop to the next support at $0.041748.
XLM USD daily chart. Source: Tradingview
The downsloping moving averages and the RSI close to the oversold zone shows that bears are in command.
Our negative view will be invalidated if the XLM/USD pair rises sharply from the current levels and breaks out of the 20-day EMA. Such a move will keep the price range-bound for a few days. The pair could pick up momentum above $0.060, hence, traders can initiate long positions as suggested in our earlier analysis.
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.