Business intelligence company MicroStrategy used the $650 million it had recently raised through convertible bonds to buy more Bitcoin. The firm’s CEO, Michael Saylor tweeted that the company had purchased 29,646 Bitcoin at a rate of $21,925. This takes MicroStrategy’s holding to 70,470 Bitcoin, worth about $1.125 billion.
Another institution, One River Digital Asset Management, revealed a $600 million position in Bitcoin and Ether.
BITCOIN VALUE FUNDAMENTAL ANALYSIS
The company plans to buy $400 million more of the assets to take the total holding to $1 billion. The firm’s CEO, Eric Peters, told Bloomberg that cryptocurrencies are likely to witness “generational allocation” and “the flows have only just begun.”
Some institutional investors are selling their gold to buy Bitcoin. Christopher Wood, global head of equity strategy at Jefferies, has sold 5% of his gold position to buy Bitcoin. Wood said that any pullback will be used to buy more Bitcoin.
On similar lines, Ruffer Investment Company Limited has also trimmed its position in gold and has purchased Bitcoin. The company said that Bitcoin will act “as a hedge to some of the monetary and market risks that we see.”
The purchases by institutional investors show their confidence in Bitcoin. However, it is unlikely that the institutions will continue buying if Bitcoin’s rally turns vertical. They may wait for a correction to get in.
Therefore, we believe that Bitcoin is ripe for a correction or a consolidation. Let’s study the charts of the top-5 cryptocurrencies and spot the critical levels to watch out for.
ALL-TIME HIGH BITCOIN VALUE TRADING – HOW TO TRADE BTC/USD
We had recommended aggressive traders to buy Bitcoin in our previous analysis if it stayed above $20,000 for a few hours. That trade triggered on December 16 when the price picked up momentum after crossing $20,000, as we had anticipated.
The biggest cryptocurrency hit a high of $24,300 on December 20. Traders who use a trailing stop could have closed their positions with a handsome profit on December 21 when the price corrected sharply.
Bitcoin’s trend remains up as the bulls continue to buy even on minor dips as seen from the long wick on the December 21 candlestick. However, the inside day candlestick pattern today shows indecision among the bulls and the bears.
If the bulls can push the price above $24,000, the BTC/USD pair could start the next leg of the up-move that may reach $28,633.84. However, such a move will suggest that traders are piling in because of FOMO.
Usually, such phases end with a sharp correction. Therefore, we suggest traders stay on the sidelines if the price moves up from the current levels.
Another possibility is that the price drops to the 20-day EMA or $20,000. Such a move will improve the risk to reward ratio and could offer a buying opportunity if $20,000 proves to be a strong support.
Contrary to these bullish projections, if the price breaks and sustains below $20,000, it will suggest that a short-term top may be in place.
ETHEREUM TRADING – HOW TO TRADE ETH/USD
Ether broke above the $625 resistance on December 16 and that completed an ascending triangle pattern. It also triggered the buy proposed in the previous analysis.
Although the bulls pushed the price to $677.05 on December 17, they could not sustain the higher levels as seen from the long wick on the day’s candlestick.
The failure to move up could have attracted profit booking from the momentum traders and that pulled the price back below the $625 support on December 21. The bulls are currently attempting to defend the 20-day EMA.
If the ETH/USD pair rebounds off the current levels and rises above $625, the bulls will once again try to resume the uptrend. A break above $677.05 will signal the start of the rally. The target objective on the upside is $770.
Contrary to this assumption, if the bears sink the price below the 20-day EMA and the trendline of the triangle, it will suggest that a short-term top may be in place.
Traders can keep the stop-loss below the trendline. If the next rally fails to rise above $677.05, traders can trail the stops higher to reduce their risk.
XRP TRADING – HOW TO TRADE XRP/USD
XRP found support at the 50-day SMA on December 16 and rebounded sharply. However, the long wick on December 17 candlestick shows that traders booked profits when the price neared $0.65.
The bulls tried to keep the price above the 20-day EMA but the bounce lacked strength and the bears broke below the support on December 21. The XRP/USD pair could now drop to $0.043.
If the pair breaks and dips below $0.43, it could attract aggressive selling and a drop to $0.30 may be on the cards. However, if the bulls again defend the $0.43 support, the pair could extend its stay inside the range.
The 20-day EMA is flat but the RSI has dipped below 43, which suggests that bears are trying to gain the upper hand. Traders may stay on the sidelines as we do not find any reliable setups at the current levels.
BITCOIN CASH TRADING – HOW TO TRADE BCH/USD
We had expected Bitcoin Cash to stay inside a range before starting the next trending move. However, the bulls pushed the price above the $280 resistance on December 15.
That was followed by a rally to $326.73 as we had expected. After consolidating below this resistance for three days, the BCH/USD pair again surged on December 20 and rallied to $368.04. The bulls booked profits at higher levels and the pair closed just below $350.
The bulls made another attempt to scale the price above $350 on December 21 but the bears again sold the higher levels aggressively. This resulted in a sharp reversal from $380.95.
The bulls are currently attempting to defend the 20-day EMA. If the pair rebounds off this support, the bulls will again try to push the price above $350.
However, the huge volatility and the price rejection above $350 suggests that the pair may remain range-bound for a few days. We do not find any bullish setups that could be bought.
LITECOIN TRADING – HOW TO TRADE LTC/USD
We had expected Litecoin to spend some more time inside the triangle before breaking out but the bulls had other plans. The strong up-move on December 16 propelled the price above the triangle.
That attracted buying from traders who were waiting for the setup to complete and the uptrend to resume. The sharp momentum pushed the price to the pattern target of $120 on December 19.
Although the price rose above $120, the bulls could not sustain the higher levels. The LTC/USD pair turned down on December 20 but the bulls are attempting to defend the 50% Fibonacci retracement level at $101.42.
A strong rebound off this support could retest the $124.40 resistance. If the price rises above this level, the uptrend may resume.
Contrary to this assumption, if the pair breaks below $101.42, the decline could extend to the 20-day EMA. A deeper correction usually reduces the chances of the continuation of the uptrend.
Hopefully, you have enjoyed today’s article.
Thanks for reading! Have a fantastic day! Live from the Platinum Crypto Trading Floor.
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