Bitcoin has pulled back this week on indications that the US Federal Reserve may raise rates at a faster face to combat surging inflation. The CME’s FedWatch Tool projects a 75% possibility of a 50 basis point hike in the next Federal Reserve meeting in May.
The Fed may not be as “behind the curve” as many believe it to be but it may have to hike rates to about 3.5%, according to St. Louis Fed President James Bullard.
Along with increasing rates, the Fed also plans to reduce the size of its $9 trillion balance sheet by $95 billion from May. Rising rates and the tapering of the balance sheet may be bullish for the US dollar, which has risen more than 4% year to date. During the same period, Bitcoin is down over 8%, indicating the inverse correlation between the two. A strengthening dollar could put a lid on Bitcoin’s rally in the near future.
“My crypto portfolio at the beginning of 2022 was 50% Bitcoin and 50% Ether. I have conviction in the cheapness of ETH relative to the rest of the crypto firmament. Therefore, my target allocation is 25% Bitcoin and 75% Ether”, Hayes added.
However, the near-term uncertainty has not deterred the institutional buyers who continue to accumulate for the long term. MicroStrategy recently announced that it had purchased 4,167 Bitcoin for about $190.5 million through its subsidiary MacroStrategy. After the latest purchase, MicroStrategy’s total Bitcoin stash has risen to 129,218 Bitcoin.
Another high-profile purchase was by Terra, which bought 5,040 Bitcoin, valued at roughly $230 million, to boost its stockpile to 35,768 Bitcoin, according to wallet data.
While Bitcoin remains closely correlated to the S&P 500, certain altcoins have been showing signs of outperformance that drives all to look beyond Bitcoin. Let’s study the charts of the five cryptocurrencies that are showing a positive chart structure.
SOL/USD Market Analysis
Solana completed a rounding bottom pattern when it broke and closed above $121.93 on March 31. However, the bulls could not sustain the momentum at higher levels as the price turned down from $143.51 on April 2.
Although the bears pulled the price back below the breakout level of $121.93, they could not crack the support at the 20-day EMA. This suggests that the sentiment may have shifted from selling on rallies to buying on dips.
The SOL/USD pair rebounded off the 20-day EMA on April 7 and the bulls are trying to push the price above $121.93.
If they succeed, the pair will attempt to rise above the overhead resistance at $143.51. If that happens, the pair could rally to $160 where the bears are expected to pose a strong challenge.
Contrary to this assumption, if the price turns down and plummets below the 20-day EMA, it will suggest that the break above $121.93 may have been a bull trap. The pair could then extend its decline to the 50-day SMA.
LUNA/USD Market Analysis
Terra’s LUNA token remains in a strong uptrend. Although the price turned down from $119.55 on April 5, the bulls are aggressively defending the zone between the 20-day EMA and the psychological level at $100.
If the price rebounds off the current level with strength, the buyers will make one more attempt to push the LUNA/USD pair to a new all-time high. If they succeed, the pair could start its northward march toward $140.
Contrary to this assumption, if the rebound fizzles out near $110 and turns down, the pair could form a bearish head and shoulders pattern, which will complete on a break and close below $100.
If that happens, the pair could start a downward move with the first stop at the 50-day SMA and then toward the pattern target of $80. The negative divergence on the RSI also cautions that the bullish momentum may be weakening.
AVAX/USD Market Analysis
Avalanche has been facing stiff resistance in the zone between $96 and $100. Both moving averages have flattened out and the RSI is near the midpoint, indicating a balance between supply and demand.
A minor positive is that the bulls defended the 50-day SMA on the downside and are attempting to push the price back above the 20-day EMA. If they manage to do that, the AVAX/USD pair will again try to clear the overhead hurdle.
A break and close above $100 will complete a bullish ascending triangle pattern. This could start a new uptrend to $123 followed by a move toward the pattern target of $133.
Contrary to this assumption, if the price turns down from the 20-day EMA or the overhead zone and breaks below the 50-day SMA, the decline could extend to the trendline of the triangle.
This is an important level to watch out for because a break below it will invalidate the bullish setup, which may intensify selling. The pair could then drop to $59.
NEAR/USD Market Analysis
NEAR Protocol’s NEAR token has been in a strong uptrend in the past few days. The NEAR/USD pair pulled back to the 20-day EMA on April 7 but the strong rebound off it indicates aggressive buying at lower levels.
The bulls have pushed the price above the immediate resistance at $18, indicating the resumption of the upward move. The pair could now rally to the all-time high of $20.59 where the bears may mount a strong resistance.
If the price turns down from the all-time high but bulls do not give up much ground, it will suggest that the traders are not booking profits aggressively as they expect the uptrend to continue. The pair could then rally toward $25.
The upsloping 20-day EMA and the RSI in the overbought zone indicate that bulls are in control.
This positive view will invalidate in the short term if the price turns down and breaks below the 20-day EMA. Such a move will indicate that supply exceeds demand.
XMR/USD Market Analysis
Monero has been facing resistance near $230 for the past few days but a positive sign is that the bulls have not allowed the price to break below the 20-day EMA. This indicates that buyers are accumulating on dips.
If bulls propel the price above the overhead resistance, the XMR/USD pair could rally to $255 where the bears may mount a strong defence. The rising moving averages and the RSI in the positive territory indicate the path of least resistance is to the upside.
However, if the price turns down from the current level, the pair may drop to the 20-day EMA. This is an important level for the bulls to defend because a bounce off it will suggest that the sentiment remains positive.
On the other hand, a break and close below the 20-day EMA will be the first sign that short-term traders who may have purchased at lower levels may be rushing to the exit. That could pull the price down to the 50-day SMA.
Hopefully, you have enjoyed today’s article for further coverage please check out our crypto Blog Page. Thanks for reading! Have a fantastic day! Live from the Platinum Crypto Trading Floor.
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