Institutional demand for Bitcoin remains high, even as the price turned down after the block reward halving. Some in the space believe that if institutional and retail demand picks up, there will be a severe shortage of (BTC), which can quickly push its price higher.
A small example can be seen in the way crypto fund manager Grayscale Investments has been lapping up Bitcoin, the top-ranked cryptocurrency on CoinMarketCap. Since the halving, Grayscale alone has bought about 150% of the newly mined Bitcoin. If this pace of purchasing continues for a few more weeks, traders’ sentiment could turn decidedly bullish.
Stocks usually react strongly to upgrades or downgrades by large brokerage houses or investment banks. However, the crypto community decided to go contra to Goldman’s recent warning to its clientele against investing in Bitcoin. This suggests that crypto traders do not give much weight to the reports by traditional brokerages.
The huge rise in Bitcoin’s price over the past decade has not happened due to support from the government or from the brokerage houses. It happened as people saw an opportunity in the possibility of a decentralized world. Digital Assets Data CEO Mike Alfred recently told Cointelegraph that as the world becomes more digital and virtual, the younger generation would be more interested in digital gold, rather than physical gold.
Today also marks the expiry of CME BTC Options contracts. Typically the expiry has led to a 2.3% drop in Bitcoin’s price. Usually, fluctuations caused due to derivatives expiry are short-term blips and they don't change the ongoing trend. Therefore, swing traders should initiate trades based on the trend and not so much on the CME expiry.
BTC/USD
Bitcoin (BTC) broke above the 20-day exponential moving average ($9,151) on May 27 and followed it up with another strong up move on May 28. This suggests that the path of least resistance is to the upside.
However, the bears are unlikely to give up without a fight. They are mounting a strong resistance at the $9,600 level. If this level is scaled, a move to the resistance line of the symmetrical triangle is likely.
A breakout of the triangle will signal the possible start of the next leg of the uptrend. The pattern target following a breakout of the triangle is $11,828.
Conversely, if the BTC/USD pair turns down from the current levels, the bears will try to sink it back below the 20-day EMA. If successful, the next stop would be the support line of the symmetrical triangle. A break below this level will be a huge negative as the pattern target of the breakdown from the triangle is $6,752.
ETH/USD
Ether (ETH) jumped above the neckline of the inverse head and shoulders pattern on May 28, which is a positive sign. There is a minor resistance at $227.097 above which the rally can extend to $257.
Currently, the bears are attempting to sink the 2nd-ranked cryptocurrency on CoinMarketCap back below the neckline. If the price sustains below the neckline, it will suggest that the current breakout was a bull trap.
A break below the 20-day EMA and the support at $191.692 could signal the start of a possible downtrend. Therefore, traders who have purchased on the recommendation given in the previous analysis can keep their stops at $200.
However, if the ETH/USD pair bounces off the neckline, the bulls will make one more attempt to clear the $220.097 hurdle. If successful, the uptrend is likely to resume. The upsloping moving averages and the relative strength index above 60 levels suggest that bulls have the upper hand.
XRP/USD
The bears are defending the downtrend line. If XRP turns down from the current levels, the bears will try to drag the price towards the critical support at $0.17372. A breakdown of this support will be a huge negative as it is likely to start a new downtrend.
Conversely, if the bulls can propel the 3rd-ranked cryptocurrency on CoinMarketCap above the downtrend line and the horizontal resistance of $0.20570, a move to $0.22504 and then to $0.23612 is possible.
Traders who don’t own long positions can buy if the XRP/USD pair sustains above $0.20570 for a few hours. The stop-loss for this trade can be kept at $0.19.
BCH/USD
Bitcoin Cash (BCH) had broken above the 50-day simple moving average ($238) today but the bulls are facing stiff resistance at higher levels. If the price turns down and slips back below the moving averages, a drop to $217.55 is likely.