In the past few weeks, seasoned traders and investors who have been in the cryptocurrency space might begin to feel as if Bitcoin has lost its charm as its price continues to trend sideways. The rise of DeFi tokens brought life back to the market as this new asset class came in with insane volatility as well as massive returns for those who got in early (despite DeFi tokens facing severe price corrections now).
The monthly Bitcoin Volatility Index (BVOL) has crashed down to 30 points from its peak at 170 points at the end of March. This indicates the maturity of the asset where it no longer swings up and down in double digits.
This reduction in volatility can position Bitcoin as a more welcoming asset class to institutional investors currently intimidated by BTC’s infamous volatility risk. The large players who have assets under management in terms of trillions of dollars cannot risk their clients’ funds in an asset that moves like a rollercoaster on steroids. The maturity might package Bitcoin as a boring asset, but it sure will help the digital asset grow in the long run.
Moreover, if we ask the average joes what cryptocurrency they know about, the answer would not be UNI or YFI despite their growing popularity, but Bitcoin.
With Bitcoin continuing to grow in the next supercycle, the burst of the DeFi bubble’s effect would be minuscule. Surely, the market could react with panic sell-offs, but Bitcoin being resilient as it is, will not be affected as much as the smaller projects.
Bitcoin Technical Analysis
Bitcoin (BTC) is still trending in a sideways manner. Despite the recent shake off, BTC did not make a lower low, which displays the strength and confidence of the bulls. If it manages to bounce back and regain $11K territory, the bullish upside would be in a clearer picture.
Using a TA tool like the Bollinger Band (BB) is best when the price goes sideways. We can see that the band now begins contracting, signaling imminent breakup or breakdown from the range. The price pattern now forms a clear symmetrical triangle, which amplifies the idea of breakout being right around the corner.
The first resistance for BTC still lies at $11,500 – $12,000 and the next major resistance is located right above at $12,500 which was the 2020’s high waiting to be tested by the bulls.
Ethereum Technical Analysis
The Ethereum (ETH) price is currently being supported by the rising trendline generated back from the 2020’s low in March. In the smaller time frame, however, ETH is being suppressed by the overhead resistance (dotted line).
If Ethereum is unable to reclaim and stand above $380 could send it down to retest the $320 support level provided by the rising trendline in green. A dip below the trendline should be stopped by the $310 Fibonacci’s level, falling below this could result in another massive drop in price especially when the DeFi hype which helps drive up ETH price is now fading away.
ETH is now in desperate need of higher highs in order to break away from the suppressing dotted trendline. The next target for the bull would be to reclaim the $400 before any attempts of making a new yearly high could be made.
Disclaimer: This analysis is the view of the author’s alone, and does not in any way represent trading advice. all traders should trade at their own risk.
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