• Over the weekend, both Bitcoin (BTC, Tech/Adoption Grade “A-”) and Ethereum (ETH, Tech/Adoption Grade “A-”) were able to extend their recoveries and clear initial resistance levels we mentioned late last week.
• Bitcoin is hovering above its 21-day moving average, and staying above that metric for the next few days will confirm an end to its recent slide.
• Ethereum is up 5% today after finally clearing its 21-day moving average.
The King of Crypto has reset the tone for the cryptocurrency market after finally crossing back above the highly important level of $50,000.
Bitcoin also managed to close above its 21-day moving average; if it can hold above that level for a few days, we should be able to confirm that last week was a market bottom.
BTC is currently trading just below $51,000, with the next upside resistance at about $52,500. The main thing to watch here is whether the King can stay above the moving average and turn that metric into a support level once again.
Here’s BTC in U.S. dollar terms via Coinbase:
Ethereum had been struggling over the last two weeks, as it slipped from $2,000 all the way to lows near $1,300. ETH managed to set a strong support level at $1,400, though it failed to clear above $1,600 for five straight days after the lows set on Feb 28.
But, over the weekend, it finally was able to clear that level, shooting up a total of 13% into Monday morning. ETH managed to cross back above its 21-day moving average during that run and is in the same boat as Bitcoin this week.
As is the case for the No. 1 crypto, the main thing to watch for No. 2 is whether it can close above its moving average for the next two days, as this will be a definitive way to call an end to the correction.
Here’s ETH in U.S. dollar terms via Coinbase:
Notable News, Notes and Tweets
• Pomp comments on PayPal Holdings, Inc.’s (Nasdaq: PYPL) acquisition of Curv, noting the payments giant’s “commitment to embracing Bitcoin and cryptocurrencies.”
• MicroStrategy Inc. (Nasdaq: MSTR) CEO Michael Saylor tweets about the explosion of institutional investment in Bitcoin.
• The IRS is cracking down on traders with unreported crypto profits with “Operation Hidden Treasure.”
What’s Next
We’d been counseling “patience” in response to the volatile action over the last two weeks, noting the normality of 20% to 40% retracements during cryptocurrency bull markets and how short-lived those corrections can be.
We can’t completely confirm the bottom is in for this correction just yet. But things are looking good for the crypto bulls.
Do be prepared for a few more weeks of (albeit lower) volatility from here, perhaps some sideways price action. Such periods of lower volatility and “directionless” trading allow the market to heal. Let’s use them as opportunities to re-evaluate investment strategies.
The next two or three days will help confirm the direction the market will likely take next. The main thing to watch is whether Bitcoin and Ethereum can hold above their respective 21-day moving averages.
Our long-term thesis will not change based on what happens between now and the end of the regular trading week. From a medium-term trading perspective, we still believe the market will continue to favor the bulls for another nine to 12 months.
What we’re looking for in the immediate future is a better idea how things will shake out over the next one to three months. Stay tuned for updates on the situation.
Best,
Alex
