Strong US jobs data for January failed to pull Bitcoin lower and pick altcoins lower, pointing to the downside of a strong rally.
The rally in 2023 is fueled by expectations that the US Federal Reserve will slow the pace of rate hikes as inflation begins to cool. Some even expect a rate cut by the end of the year. That assumption was challenged on February 3 when US employment data for January beat expectations, sending unemployment to the lowest level since May 1969.
If markets do not react negatively to news that is perceived as bearish, this is a sign that sentiment has turned positive. Traders can then turn their attention to the next release of important economic data. Trading firm QCP Capital said in its latest market update that the consumer price index printed on February 14 could move markets. They believe the risks to data are higher.
The current cryptocurrency market seems to have sidelined institutional investors. According to a new survey conducted by JP Morgan, 72% of institutional traders say they do not plan to “trade crypto/digital coins” in 2023. Only 14% of respondents indicated a tendency to trade this year.
Will Bitcoin and Altcoins See Profit Margins Anytime Soon? To find out, let’s study the charts of the top 10 cryptocurrencies.
On February 1st, Bitcoin broke out of the $22,800 support, indicating that the bulls bought the dip to that level. The bulls pushed the price above $24,000 on February 2, but failed to hold the higher levels.
Rising moving averages and relative strength (RSI) in the overbought zone indicate that the path of least resistance is up. If the price rises from the current $22,800, the BTC/USDT pair may rise to $25,000. This level will likely act as a formidable barrier.
The first sign of weakness will be a break and close below the 20-day exponential moving average (EMA) ($22,279). This may cause several short-term traders to stop and the pair may drop to $21,480.
Buyers promoted Ether
It was above the $1,680 overhead resistance on February 2, but failed to hold the breakout. The price gave up all gains for the day and closed below $1,680.
The rising 20-day EMA ($1,571) and the RSI in positive territory suggest that the bulls are in control. They may try to break the $1,680 level again and start the journey towards $2,000. The $1,800 level may offer some resistance but is likely to be broken.
If the bears want to take advantage, they will need to sell aggressively and pull the price below the 20-day EMA. If they succeed, the ETH/USDT pair could drop to $1,500 and if this support is broken, the pullback could eventually reach $1,352.
A narrow range trade between the 20-day EMA ($306) and upper resistance at $318 resolved to the upside on February 2.
Although the bears sold the rally on February 2, the positive sign is that buyers did not allow the price to fall back below $318. This suggests that the bulls are trying to turn the $318 level into support. If they succeed, the BNB/USDT pair could rise to $360 as there is no major barrier between them.
If the bears want to stop the rally, they will have to pull the price below the 20-day EMA. The pair may then drop to the 50-day simple moving average (SMA) of $276.
It bounced off the $0.42 resistance on February 2, indicating that the bears are trying to hold that level.
The price is trapped between the 20-day EMA ($0.40) and $0.42. This suggests that a breakout may be just around the corner. The 20-day EMA and RSI, which are gradually rising in positive territory, indicate that the bulls have the upper hand. This raises the possibility of a break above $0.42. If this happens, the XRP/USDT pair could rise to $0.51.
Contrary to this hypothesis, if the price breaks down and falls below the 20-day EMA, the decline may extend to the 50-day SMA ($0.37).
The Bears’ attempts to sink Cardano
It broke below the 20-day EMA ($0.37) on February 1. As indicated by the long tail of the candlestick, the bulls defended the level fiercely.
A negative divergence in the RSI suggests weakening momentum, but a rising 20-day EMA suggests that buyers have the upper hand. If the price breaks above the current level, the bulls will again try to push the ADA/USDT pair towards the upper resistance at $0.44.