The list of institutions investing in Bitcoin continues to grow. Massachusetts Mutual Life Insurance Co. recently purchased $100 million worth of Bitcoin and also took a $5 million stake in NYDIG. As insurance companies adopt a conservative approach to investing, this purchase assumes greater significance.
JPMorgan analysts believe that Mass Mutual’s purchase could attract pension funds and insurance companies from the Eurozone, the UK, the US, and Japan.
BITCOIN VALUE FUNDAMENTAL ANALYSIS
Even if these investors only hold 1% worth of their portfolio in Bitcoin, a total of $600 billion could flow into Bitcoin.
While most institutions are taking small bets on Bitcoin, business intelligence firm, MicroStrategy has not only gone all in, it will even borrow money and invest in Bitcoin. The firm has raised $650 million in convertible bonds at 0.75% interest per year. The company said that after calculating working capital requirements and other general uses, the rest of the capital will be used to buy Bitcoin.
But why are the institutional investors buying when Bitcoin’s price is close to $20,000? Ruchir Sharma, chief global strategist at Morgan Stanley Investment Management, said that the US dollar’s reign as the default reserve currency of the world could be under threat due to the incessant money printing. “Trusted or not, Bitcoin will gain from widening distrust in the traditional alternatives.”
This shows that institutional investors anticipate a currency crisis in the future. Therefore, they are diversifying into various asset classes. With the institutional demand picking up, will the top-5 cryptocurrencies resume their uptrend? Let’s find out.
ALL-TIME HIGH BITCOIN VALUE TRADING – HOW TO TRADE BTC/USD
Bitcoin broke below the pennant formation on December 8, which shows that the bears overpowered the bulls. The price also dipped below the 20-day EMA on December 11 but instead of panicking and dumping their positions, the bulls purchased this dip. This shows that traders are waiting for dips to accumulate.
The BTC/USD pair soared back above the 20-day EMA on December 12, which attracted further buying. Currently, the bulls are attempting to push the price to the $20,000 psychological resistance. This level may prove to be a tough nut to crack as the bears are likely to mount a strong defence.
If the price turns down from $20,000 but does not fall below $19,500, it will suggest that traders are not closing their positions in a hurry. Such a move will improve the possibility of a breakout above $20,000. If that happens, it will cause FOMO among traders who have not participated in the rally and the momentum could pick up.
Aggressive traders can buy after the price sustains above $20,000 for a few hours and keep a close stop-loss. This is a breakout trade. Hence, after the price rises above $20,000, it should not fall and sustain back below this level. If it does, then it will be a bull trap.
Contrary to this bullish assumption, if the price turns down from the current levels and breaks below $18,000, it will suggest aggressive selling at higher levels. That could keep the price range-bound between $16,200 and $20,000 for a few days.
ETHEREUM TRADING – HOW TO TRADE ETH/USD
Ether broke below the 20-day EMA on several occasions last week but the bears could not capitalise on this weakness. This shows traders are accumulating at lower levels.
The biggest altcoin is also forming an ascending triangle pattern, which will complete on a breakout and close above $625. This bullish setup has a pattern target of $770, which is just below the next major resistance at $800.
Therefore, if the price sustains above $625 for a few hours, aggressive traders can buy with a close stop-loss. The upsloping moving averages and the RSI in the positive territory suggest that the path of least resistance is to the upside.
Even if the price turns down from the overhead resistance but does not break below the trendline of the triangle, it will remain on target to rise higher.
This bullish view will be invalidated if the bears sink and sustain the price below the trendline of the triangle. If that happens, the ETH/USD pair may drop to the 50-day SMA and then to the critical support at $480.
XRP TRADING – HOW TO TRADE XRP/USD
We had expected XRP to consolidate between $0.542 and $0.683 but that did not happen. The altcoin slipped below $0.542 on December 12 and can now drop to the next strong support at $0.45961.
The bulls are likely to defend this level aggressively but if the price does not rebound with strength, the bears will attempt to sink the price below it. The downsloping 20-day EMA and the RSI below 50 suggest that bears are making a comeback.
If the price drops below $0.45961, the next support is at the 50-day SMA. If the price rebounds off this level, the bulls will make one more attempt to resume the uptrend but are likely to face stiff resistance at the 20-day EMA.
Conversely, if the bears sink the price below the 50-day SMA, then the XRP/USD pair could fall to $0.28. Traders may remain on the sidelines as we do not find any reliable buy setup at the current levels.
BITCOIN CASH TRADING – HOW TO TRADE BCH/USD
Bitcoin Cash dropped below the $280 support and the 50-day SMA on December 8 as we had suggested in the previous analysis. The bulls purchased the dip to $254.92 on December 9 and pushed the price back to $280 on December 13.
However, the bears are not willing to give up their advantage without a fight. They are aggressively defending the $280 resistance. If the price again drops below the moving averages, the BCH/USD pair could remain range-bound between $250 and $280 for a few days.
The flat moving averages and the RSI just below the 50 level also point to a possible consolidation in the near term.
This view will be invalidated if the bears sink the price below $250. In such a case, the pair could drop to $230. On the other hand, if the bulls push and sustain the price above $280, the pair could rise to $300 and then to $326.73.
We are not recommending any trade as we do not find any reliable buy setups.
LITECOIN TRADING – HOW TO TRADE LTC/USD
Litecoin dropped to $69.94 and rebounded as suggested in our previous analysis. The sharp bounce off the 50-day SMA suggests that bulls are buying aggressively at lower levels.
The price rose above the 20-day EMA on December 13 but the bears are trying to stall the recovery at $84. If the price sustains above the 20-day EMA, it increases the possibility of a rise to $88.
The LTC/USD pair has formed a symmetrical triangle, which usually acts as a continuation pattern. Trading inside the triangle can be random and volatile, hence, it is better to wait for the price to break above or below the triangle before attempting a trade.
However, as the triangle is large, one possible option is to buy when the price dips and rebounds off the support line of the triangle. This will give an opportunity to trade the swings inside the triangle by keeping a close stop-loss.
Therefore, traders can wait for the price to rebound off the 50-day SMA before buying. The stop-loss can be kept just below the support line of the triangle.
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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