- Bitcoin price consolidates after tagging $23,000.
- Ethereum moves in unison with BTC and eyes the $2,000 level.
- XRP price rallies by 8% on the day.
The crypto market continues to consolidate after the unexpected rally witnessed in January. While many investors may be in disbelief of the crypto's potential, the technical analysis sheds light on previous bull run scenarios that align with the current.
Bitcoin price could have more fuel in the tank
Bitcoin price trotted into the $23,000 price zone over the weekend and has since returned under a profit-taking consolidation. As the market cools off, traders have another decision to make. Will they add to their positions, or is it time to call an end to the surging rally?
Bitcoin price currently auctions at $22,837, down 2% from the new monthly high formed at $23,371.80. The Relative Strength Index (RSI), an indicator used to gauge trend potential by assessing previous swing points, shows a bearish divergence between the newfound monthly high and the previous one that occurred on January 15 when Bitcoin breached $21,000.
The divergence is a sign that the trend is getting overextended, which could be an enticing signal for the bears to take advantage of. Still, traders should be cautious as the diversions on the other side are extremely over territory. Bitcoin is notoriously known for trending overbought territory for weeks towards higher prices while the RSI makes lower highs.
For instance, the Bitcoin price reached 80 on the RSI in January of 2021 upon BTC's first encounter with the $40,000 price zone. Bitcoin diverged for several weeks while climbing to $60,000 by April 2021. Thus, it is imperative that traders review the history of BTC before expecting classical technical analysis concepts to negate the surging trend's potential.
The bulls would not be wrong for entering the market through a pullback that could be on the horizon. A dip could be considered a buying opportunity. So long as the RSI can remain above 40 amidst any future sell-offs, bullish targets are the $30,000 and potentially $35,000 liquidity levels.
BTC/USDT 1-day chart
Invalidation of the uptrend currently depends on the previous swing high at $18,887 getting breached. This would invalidate the impulsive structure and potentially create a steeper retracement toward the 2020 low at $15,476. The BTC price would decline by 30% if the bears were to succeed.
Ethereum price is cooling down
Ethereum price is undergoing account consolidation after tagging the mid-$1,600 zone late last week. Like Bitcoin, the RSI is overbought and shows a bearish divergence between highs at $1,675 and $1,566.
Still, there is significant liquidity to collect as November's monthly high at $1,680 was not tagged during the previous rally. As the price consolidates 2% below the liquidity level, it is hard to believe market makers would rally the ETH price so close to the bakery without eating the pie.
Ethereum price currently auctions at $1,636. Traders should expect a rise in the coming hours, with resistance to show up near the psychological $1,700 price zone. Ultimately, if ETH can surpass the $1,700 barrier, then $2,000 could become a tangible reality in the coming days.
ETH/USDT 1-day chart
Invalidation of the uptrend depends on the swing point at $1,349 remaining untagged. If the level is breached, the ETH price could decline further toward the $1,100 barrier resulting in a 30% decline from the current market price.
XRP price headed higher
XRP price has decoupled from the other two cryptocurrencies (BTC & ETH) as the bulls have prompted an 8% rise on the day. On January 23, while Bitcoin and Ethereum sparred over new price fluctuations, the digital remittance token soared into new highs, tagging old liquidity levels near the $0.42 zone
XRP price currently auctions at $0.421 as profit-taking has occurred post-surge. Another key difference between Ripple and the other two currencies is that the Relative Strength Index has not broken out into overbought territory on the daily time frame. Despite the surge, which is now a 40% ride since the January 1 low at $0.30, the RSI remains suppressed beneath the 70 levels. This suggests that XRP's move to the upside could be a part of a much larger correction within an overall downtrend. So long as the RSI remains suppressed beneath 70, caution should be applied.
XRP/USDT 1-day chart
Previous outlooks have maintained that XRP would rise in the short term, ideally to target the $0.427 level tag on Monday and potentially the $0.44 liquidity zone. The second target is 5% away from XRP’s current price, and invalidation of the uptrend could arise if the bears happen to breach the 8-day exponential moving average at $0.398.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
This is why a mere 15% rally in Lido DAO price could be a game-changer for LDO holders
Lido DAO price is following the rest of the market due to the regulatory events that transpired in the last few days. However, the DeFi token is generally unlikely to pursue the path set by any other cryptocurrencies, including the likes of Bitcoin. This might play in favor of LDO.
LINK holders opt to sell as Chainlink price falls by 9% in a week, new investors on the rise
Chainlink price, after following the broader market cues, is nearing a key support level that was last visited by the coin in January this year. This has discouraged LINK holders to the point where selling has become a preferred option. However, newer investors are countering this selling by accumulating, preventing a severe decline.
Optimism price could rally 50% as network upgrade inspires new wave of OP adoption
Optimism (OP) price appears to have found support after a new buyer congestion zone came into effect to prevent the free fall. Accordingly, the Ethereum Layer 2 (L2) token is trading horizontally, giving bulls time to accumulate OP at affordable rates.
Binance CEO addresses chat records disclosed by the SEC
Binance CEO Changpeng Zhao has issued an internal address to company staff, asking them to focus on work and developing products people can use. The internal memo comes after the United States Securities and Exchange Commission (SEC) disclosed chat records between Binance employees in an attempt to support its case against the largest crypto exchange by trading volume.
Top 3 cryptocurrencies that outperformed Bitcoin, Ethereum this week
The US Securities and Exchange Commission’s (SEC) crackdown on cryptocurrencies triggered a correction in the prices of Bitcoin, Ethereum and several altcoins with large market capitalization.