Bitcoin rebounds to $18K after crucial support level holds

20 November, 2020

Bitcoin (BTC) has seen a tremendous run, particularly since September, with BTC price surging from $10,500 to $18,400 — a rally of 75% in less than three months. What’s more, since March, BTC/USD has gained almost 400%, making it the best-performing asset of 2020 and likely catching many investors completely by surprise. Let’s take a look at the charts to see whether the current rally is sustainable and if a reversal should be expected in the near term.

The weekly chart of Bitcoin shows a massive run in the previous period as the region around the all-time high is being tapped. A clear resistance zone is marked around this all-time high and, thus, may serve as a trigger for investors to take some profits off the table. More importantly, however, is that the 1.618 Fibonacci extension was also reached. The Fibonacci tool is a powerful indicator to mark potential tops and bottoms, and the 1.618 level is arguably the most substantial. Currently, there are multiple arguments for a potential correction, including the Fear & Greed Index nearing record highs.

There are several key price levels to watch if Bitcoin corrects before reaching $20,000. The first level of interest for traders can be found at around $16,000. The next levels are at $13,500 and $11,600. The total market capitalization of cryptocurrencies has arrived at the next and final resistance zone before a possible new all-time high: $500 billion is likely to be a significant hurdle to overcome.

Remarkably, Bitcoin’s price is now just 10% beneath its all-time high and has already broken its all-time high market cap. Meanwhile, the total cryptocurrency market cap is still down 35% from its all-time high. This shows that Bitcoin is currently in the spotlight. Altcoins will most likely begin to play catch-up later on.

However, if the cryptocurrency market starts to correct, the most likely area for a support/resistance (S/R) flip is around $380 billion to $400 billion. This level hasn’t been backtested yet, as an S/R flip here would certainly be a bullish sign for more upside. Such S/R flips are quite common in bull markets and very healthy for continuing the general uptrend. Historical data tells a lot about market cycles. Until now, the fourth quarter of 2020 is showing many signals that are similar to previous years. One of them is the increase in Bitcoin dominance over the past weeks, which has risen to over 66%.

As long as Bitcoin is in the spotlight, altcoins will not perform well. And if Bitcoin corrects, then altcoins are likely to drop even more.


Source   Presented by FxPro
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