In an interview with Bloomberg, Michael Sonnenschen, chief executive of Grayscale, said that in addition to hedge funds, pension and trust funds have also begun investing in the Grayscale family of products. This indicates that a large group of organizations are accumulating Bitcoins (BTC).
As this trend improves, investment banks have also decided that they do not want to be left behind. Morgan Stanley’s recent filing shows the acquisition of a 10.9% stake in business intelligence firm MicroStrategy, a move likely to be taken to gain access to bitcoin. With the availability of 70,470 Bitcoins, MicroStrategy becomes a Bitcoin agent game.
Some analysts suspect that the current demand may also come from investors who closed their gold positions and bought bitcoin. When asked about the inefficiency of gold recently, Jim Kramer, presenter of Mad Money on CNBC, suggested that institutional money could flow into digital currency.
Although there have been positive reports of institutional purchases, traders should also track who sold, because at some point the demonstration will lose momentum and investors will look to take profits.
Physical indicators analysts are speculating that the mega whales may have made a profit on January 7 when Bitcoin hit $ 40,000, and more whale sales may also drive the price down today. However, violent buying at dips led to a strong recovery.
But that didn’t stop the whales from selling. Bitcoin whales in South Korea have given up their positions in recent days, and deposits worth $ 100 million on exchanges also appear. Although the sale did not lead to a major push to close, traders should be cautious in their trades, because even if two large US investors are in a hurry to close, it could lead to a sharp downturn.
If Bitcoin improves dramatically, it is likely that most cryptocurrencies will follow suit, but if Bitcoin remains strong, these top five cryptocurrencies may outperform in the short term.
Let’s analyze their charts to determine what critical levels to watch out for.
Bitcoin / USD
Bitcoin has had a strong bullish trend in recent weeks, but the rally has pushed the Relative Strength Index (RSI) into overbought territory. While the markets may remain in overbought territory for a long time, the risk of a sharp correction increases with each rally.
The first support on the downside is the intraday low reached on Jan 8th at $ 36,518.73. If the price bounces off this level, it would mean that traders are not in a hurry to profit and buy at a lower dip.
If the bulls raise the price above $ 4,1559.63, the trend can resume with the next target of $ 45,000 followed by $ 50,000.
However, if the bears push the price below $ 36,518.73, the Bitcoin / USD pair might drop to the 38.2% Fibonacci retracement level of the last stage of the upward move to $ 32816.03.
This is an important support to watch, because if it is broken, some traders may start to panic and abandon their positions, which could lead to a deeper correction of the 61.8% retracement level at $ 27,167.10.
4-hour chart shows that the price is currently stuck at $ 38,000 to $ 41,959.63. If the bulls can push the price across the area, then the trend can resume.
On the other hand, if the bears push the price below the area’s support, traders will offer to take profits.
The next support behind it is the 50 simple moving average, which has not been decisively broken during previous corrections in this uptrend segment. Hence, if this support collapses, it will indicate a possible change in direction.
ADA / USD
Cardano (ADA) is currently consolidating in an uptrend. The alt currency has stuck between $ 0.2632811 and $ 0.3542857 in recent days, causing the RSI to drop from deep overbought levels.
The bulls are currently facing strong resistance around the $ 0.34 level, but in a positive sign, there are no signs of panic selling yet. If the bulls are able to lift the price above the upper resistance, the next stage of the uptrend can resume.