Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Bitcoin and Ethereum near record highs: What’s the next trade?

By Matthew WellerCryptocurrencyJan 21, 2021 12:44AM ET
www.investing.com/analysis/bitcoin-and-ethereum-near-record-highs-whats-the-next-trade-200556558
Bitcoin and Ethereum near record highs: What’s the next trade?
By Matthew Weller   |  Jan 21, 2021 12:44AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Following the asset class's euphoric peak at $900B in January 2018, the value of all cryptoassets entered a deep winter, eventually contracting by nearly 90% to just $100B by the end of that year. While it took a while for traders to lick their wounds and jump back in, we’ve finally seen Bitcoin and the broader crypto market exceed the peak from three years ago and eclipse the widely-watched $1 trillion market cap level.

With Bitcoin now trading at more than double its previous price peak and Ethereum, the #2 cryptoasset, hitting a record high of its own as we go to press, traders are wondering how to take advantage of this asset class. Below, we run down the current technical and fundamental factors for the two biggest cryptoassets:

Bitcoin

With major economies across the globe engaging in unprecedented experiments in monetary and fiscal policy (“money printing” and “deficit spending” colloquially), Bitcoin’s programmatically fixed supply is more attractive than ever. Last year’s quadrennial “Bitcoin halving” cut the new supply of Bitcoin’s to just 6.25 BTC per ten minutes, taking the “inflation rate” of Bitcoin to just 1.8%, below that of gold and most major currencies.

Since the last peak more than three years ago, programmers have dramatically improved Bitcoin’s functionality, building out improvements including the layer-2 Lightning Network for small transactions and enhancements to privacy and fungibility. At the same time, the asset is now more accessible to retail investors than ever, with options to buy from Square’s Cash app, Robinhood, and PayPal, among other big-name services.

In terms of the bitcoin price, the momentum remains firmly at the bulls’ backs. The cryptoasset has nearly quadrupled in the last four months, highlighting the inherent volatility of the asset class, but the price action so far suggests rates may have further to run. As the chart below shows, the recent consolidation has alleviated the overbought condition in the daily RSI indicator, potentially clearing the way for another leg higher.

From a price action perspective, Bitcoin is currently consolidating within a “bullish pennant” formation, suggesting that prices could exceed $50,000 in short order if we see a bullish breakout in the coming days. One the other hand, a break lower from this pattern would point to a deeper retracement to sub-$30k levels, though it would likely take a more severe drop to erase the established uptrend:

BTC/USD Daily
BTC/USD Daily

Source, all charts: TradingView, GAIN Capital

Ethereum

The world’s second-largest cryptoasset, Ethereum, has come a long way from three years ago, when it was most famous for providing the infrastructure that fueled the Initial Coin Offering (ICO) boom. At a high level, the Ethereum blockchain allows developers to use smart contracts to create decentralized apps (dApps). It underwent a major upgrade to Ethereum 2.0 last year, making the network faster and more secure. At the moment, the dominant narrative driving Ethereum is the growth of Decentralized Finance (DeFi) applications, which facilitate peer-to-peer financial transactions without intermediaries like banks.

Technically speaking, the Ethereum price has materially outperformed Bitcoin over the last year, with ETH/USD rising from below $100 in the depths of the COVID-19 pandemic bottom in Q1 last year to test a record high near $1300 as of writing. Looking ahead, it’s hard to bet against the strong bullish momentum in Ethereum.

If ETH/USD can confirm its break above the January 2018 high near $1400, bulls may quickly turn their eyes upward toward $1800 (the 127.2% Fibonacci extension of the 2018 collapse), $2000 (key psychological level) or even $2250 (the 161.8% Fibonacci extension). Of course, this relatively new asset class remains tremendously volatile, so prices could easily see a sharp selloff back into the triple digits if they’re unable to clear resistance near $1400, though once again, institutional and retail traders may be eager to buy any short-term dips in the cryptoasset market:

ETH/USD Weekly
ETH/USD Weekly

Original Post

Bitcoin and Ethereum near record highs: What’s the next trade?
 

Related Articles

Jason Sen
Cryptocurrencies Forecast By Jason Sen - Sep 28, 2021 2

Bitcoin still holding first resistance at 43500/44000 which keeps pressure to the downside. Ripple still holding first resistance at 9800/9900 in what appears to be a negative bear...

Naeem Aslam
Cryptos Continues To Struggle By Naeem Aslam - Sep 28, 2021

Bitcoin prices have recovered from the drop caused by the People's Bank of China's (PBOC) declaration that cryptocurrencies are illegal. By prohibiting Chinese citizens from...

Bitcoin and Ethereum near record highs: What’s the next trade?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (5)
Rares Tudone
Rares Tudone Jan 26, 2021 3:57PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
2000$ Ethereum on 14Feb?
rahmani karo
rahmani karo Jan 22, 2021 1:15AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Thanks for your analysis. Please also mention in your analysis the fundamental issues affecting the cryptocurrency, such as Ms. Yellen's appointment to the United States
Edward Chong
Edward Chong Jan 21, 2021 7:21AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
31k near record high???
Ricardo Diogo
Rcd72 Jan 21, 2021 3:19AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
it is not acceptable that working wage taxes are high as they are and this Ponzi crypto scheme is flying freely
Ricardo Diogo
Rcd72 Jan 21, 2021 3:17AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
bitcoin attractive? it is handful of nothing except for money laundering, tax evasion, speculation it must te target for heavy taxes really heavy.
Studd Muffin
FlipTicks Jan 21, 2021 3:17AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
That is completely untrue. Why should it even be taxable??? Its a currency and not a security. If you live in the USA and go to Europe for 3 months and come back and the dollar is 30% weaker you do not pay any tax on that at all what so ever. Stop being irrational.
Scott Antrim
Scott Antrim Jan 21, 2021 3:17AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Karens are gonna want to Karen.
Reza Damirchi
Reza Damirchi Jan 21, 2021 3:17AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Be aware and use. Do not talk too much. 😠
Fabio falec
falec Jan 21, 2021 3:17AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
You can't buy anything with that except for illegal goods. Go and buy bread in any country in the world with BTC?
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email