Is Bitcoin’s vertical rally in danger? Why $30K isn’t the only level to watch

59


Bitcoin (BTC) had a tremendous 2020 as the BTC price rallied by 311% in 2020. In the shadows of Bitcoin, Ether (ETH) has also been seeing a fantastic year as Ether’s price rallied by an even bigger 475%.  While only five days into the new year, ETH is continuing this trend. 

Bitcoin vs. Ether January 2021 performance. Source: Digital Assets Data

Bitcoin breaking new all-time highs above $30,000 has sparked a massive rally fire that is now spilling over to altcoins. However, the question now is whether the bull run will be continuing vertically, as in the past few months, or whether a short-term correction should be expected.

Such a correction would open the gates for most cryptocurrencies to follow Bitcoin toward their own respective all-time highs. 

Bitcoin must sustain the 21-week MA

BTC/USD 1-week chart. Source: TradingView

There are not many indicators to watch for the continuation of this bull market as only a few give you strong enough arguments for bull/bear cases.

But one useful indicator is the 21-Week Moving Average (MA). This MA served as support throughout the previous bull run, which indicated the continuation towards a peak high at $20,000.

As long as Bitcoin rests on this MA, further continuation is likely for the BTC/USD pair. At this moment, the 21-Week MA is holding support at the $16,000 level.

However, corrections are common with consolidations that could span the next few weeks. During those weeks, the 21-Week MA is going to crawl upward. Therefore, combining the future perspective of the 21-week MA with the previous all-time high gives an ultimate bottom for a correction at the $20,000 region.

BTC/USD 1-week chart. Source: TradingView

Whether Bitcoin has topped out for now is up for debate, as BTC is many bullish signals are still flashing. This bullish price action is combined with the constant outflow from exchanges, a bullish signal for the market. These Bitcoins are likely to be held for the longer term, which makes this bull cycle very different from the bull run of 2017.

Using the Fibonacci extension tools, the continuation of the current rally puts the next levels of interest at the 1.618 and 2.618 Fibonacci levels, where the next big corrections could happen. Those levels are currently lying at $50,000 and $76,000.

However, it won’t be a surprise if Bitcoin runs toward $76,000 this year given its recent strength.