This week Bitcoin (BTC) price nearly hit a new multi-year high at $16,000 and legendary investor Bill Miller told CNBC that the law of supply and demand favors BTC. While the supply is increasing by about 2.5% a year, “the demand is growing faster than that.” Miller expects every major bank, high net worth firms, and investment banks to “eventually have some exposure in Bitcoin.”
Although Bitcoin’s volatility remains high, Miller expects investors to focus on the staying power of Bitcoin as the risk of it ever going to zero is much lower than before.
At the current market capitalization of over $284 billion, Bitcoin would rank 18th when compared with publicly listed U.S. companies. Only Mastercard, JPMorgan Chase, and Visa are ahead of Bitcoin in terms of market cap.
However, after multiple media outlets announced Joe Biden as the winner of the 2020 Presidential election, the uncertainty of a long-contested ballot counting process have ended. Now market participants can focus on the first few decisions of the President-elect before aggressively buying or selling crypto assets.
If the bullish sentiment sustains, these top-five cryptocurrencies could outperform in the short-term. Let’s analyze the charts to spot the critical support and resistance levels on each of them.
Bitcoin (BTC) is currently in a corrective phase within a strong uptrend. When the sentiment is positive, traders view dips to strong support levels as a buying opportunity because it offers a low-risk entry point.
BTC/USD daily chart. Source: TradingView
The correction on Nov. 7 pulled the relative strength index down from deeply overbought levels, suggesting a shakeout of weak hands. However, the upsloping moving averages suggest that the path of least resistance is to the upside.
As the BTC/USD pair has run up sharply in the past few days, it may consolidate the gains by entering a range-bound action for a few days. Such a move will help the pair to form a strong base needed for the assault on the all-time highs.
Hence, the possibility of the pair remaining between $14,000 to $16,000 for the next few days is high.
A break above $16,000 could resume the uptrend with the next likely stop at $17,200 while a break below the 20-day exponential moving average ($13,793) may tilt the advantage in favor of the bears.
BTC/USD 4-hour chart. Source: TradingView
The correction from $15,956.26 took support just above the 50-simple moving average on the 4-hour chart. The bulls are currently attempting to resume the up-move but have hit a wall at the downtrend line.
If the price turns down from the downtrend line, the bears will again try to sink the price below $14,000. However, the bulls are likely to step in and buy this dip.
Conversely, if the bulls push the price above the downtrend line, a retest of $15,956.26 is possible. A breakout of this resistance could start the next leg of the uptrend.
Ether (ETH) is currently trading inside a rising wedge pattern. The bulls attempted to push the price above the wedge on Nov. 7 but failed to sustain the higher levels.
ETH/USD daily chart. Source: TradingView
However, the positive thing is that the bulls have not given up much ground and are currently attempting to resume the up-move. The upsloping 20-day EMA ($405) and the RSI above 66 suggests that the bulls have the upper hand.
If they can push and close the price above the resistance line of the wedge, it will invalidate the bearish pattern.
The sellers may attempt to stall the rally at $488.134 but if the bulls can propel the ETH/USD pair above this resistance, a rally to $520 and then to $550 will be on the cards.
Contrary to this assumption, if the pair turns down from the resistance line of the wedge, the bears will try to pull the price back to the support line of the wedge. A break below the wedge may tilt the advantage in favor of the bears.
ETH/USD 4-hour chart. Source: TradingView
The 4-hour chart shows that the bulls have defended the 20-EMA, which is a positive sign. This shows that the sentiment is bullish and the buyers are accumulating on dips to strong support levels.
If the bulls can push the price above $455, the pair will then try to resume the up-move by breaking above $468.
This bullish view will be invalidated if the pair turns down from the current levels or the overhead resistance and plummets below $424. Such a move could drag the price down to $395.
Chainlink (LINK) has formed an inverse head and shoulders pattern that will complete on a breakout and close above the overhead resistance at $13.28. This bullish setup has a target objective of $19.2731.
LINK/USD daily chart. Source: TradingView
The 20-day EMA ($11.36) has started to turn up and the RSI has risen into the positive zone, which suggests that the path of least resistance is to the upside.
The bulls are currently attempting to push the price above the overhead resistance. If they succeed, the uptrend could resume.
This bullish view will be invalidated if the LINK/USD pair turns down from the current levels or the overhead resistance and plummets below $9.7665. Such a move could signal an advantage to the bears.
LINK/USD 4-hour chart. Source: TradingView
The bulls had pushed the price above $13.28 but they could not sustain a breakout, which shows that the bears are defending this level.
However, the positive sign is that the bulls purchased the dip to the 20-EMA. This suggests that the sentiment is to buy the dips. If the bulls can drive the price above $13.28, the next leg of the up-move could begin.
If the price turns down from the overhead resistance, a few days of range-bound action is possible. A break below the 20-EMA will be the first sign that the upside momentum has weakened.
Unus Sed Leo (LEO) had repeatedly turned down from $1.29 levels in the past few weeks. This shows that the bears aggressively sell when the price reaches this resistance.
LEO/USD daily chart. Source: TradingView
The bulls are currently attempting to push the price above the resistance and sustain it. If they succeed, the LEO/USD pair could start the next leg of the up-move that can carry it to $1.35 and then to $1.46.
The upsloping moving averages and the RSI in the positive territory suggest that the bulls have the upper hand.
However, if the pair fails to sustain above $1.29, the bears will try to pull the price back below $1.23. Such a move could open the doors for a fall to $1.16.
LEO/USD 4-hour chart. Source: TradingView
The 4-hour chart shows that the bears have dragged the price to the 20-EMA. If the pair rebounds off this support, it will indicate buying on dips. If the price sustains above $1.29, the first target objective on the upside is $1.35.
Contrary to this assumption, if the bears sink the price below the 20-EMA, a drop to the 50-SMA is possible. If this support also gives way, the price could extend its decline to $1.23.
NEM (XEM) soared above the moving averages and reached the overhead resistance at $0.126 on Nov. 6. The bears have defended this resistance for the past few weeks and they again tried to pull the price down on Nov. 7.
XEM/USD daily chart. Source: TradingView
However, the positive thing is that the bulls did not allow the price to dip below the 50-day SMA ($0.111). This suggests that lower levels are attracting buying as traders anticipate the rally to extend in the short-term.
The 20-day EMA ($0.107) has turned up and the RSI has jumped into the positive zone, which suggests that the bulls are back in the game.
If the buyers can propel the price above the $0.126 to $0.132 resistance zone, a rally to $0.140 and then to $0.160 is possible.
This bullish view will be invalidated if the XEM/USD pair once again turns down from the overhead resistance and dips below the moving averages. Such a move will suggest that the bears are aggressively defending $0.126.
XEM/USD 4-hour chart. Source: TradingView
The 4-hour chart shows that the bulls had pushed the price above $0.126 resistance but they could not sustain the bear onslaught. As a result, the price dropped down to the 20-EMA.
However, the strong rebound off the 20-EMA shows that the bulls are aggressively buying at lower levels. They are currently trying to push the price above $0.126. If they succeed, a move to $0.132 is likely. The bears may again try to defend this level.
If the price turns down from the current levels or $0.132, the bears will try to pull the pair below $0.11. On the other hand, if the bulls drive the price above $0.132, the momentum could pick up.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk, you should conduct your own research when making a decision.