In a downtrend, when the markets do not respond negatively to bearish news, this is a sign that the selling may have reached the exhaustion stage. Reports that electric car maker Tesla dumped 75% of its Bitcoin (BTC) holdings in the second quarter caused a slight pullback as lower levels attracted strong buying from bulls.
Tesla wasn’t the only institution that sold its bitcoins. Arcane Research analyst Vetle Lunde highlighted in a Twitter thread that large institutions have sold 236,237 BTC since May 10.
It is encouraging to note that even after massive institutional selling and an unfavorable macro environment, Bitcoin has held up well.
Daily cryptocurrency market performance. Source: Coin360
The current bear market provides an opportunity for new traders to enter at lower levels. A report published by Boston Consulting Group, Bitget and Foresight Ventures showed that only 0.3% of individual wealth is parked in cryptocurrencies compared to 25% in stocks. This shows that crypto is still in the early stages of adoption compared to older markets.
Can Bitcoin and Other Digital Currencies Extend Their Short-Term Recovery? Let’s study the charts of the top 10 cryptocurrencies to find out.
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BTC / USDT
Bitcoin dipped below the 50-day Simple Moving Average (SMA) at $22,683 on July 21, but the bulls bought the decline aggressively as evidenced by the long tail on the candlestick today. Buyers are currently trying to keep the price above the general resistance at $23,363.
BTC/USDT daily chart. Source: TradingView
The bullish 20-day exponential moving average (EMA) ($21,729) and the relative strength index (RSI) are in positive territory indicating that the path of least resistance is to the upside.
If the bulls push the price above the $23,363 resistance area to $24276, the bullish momentum could increase and the BTC/USDT pair could rise to $28171 and then to $30,000.
Contrary to this assumption, if the price drops and breaks below the 20 day EMA, this will indicate that the bears have not yet surrendered. Sellers will then try to sink the pair to the support line. A breakout and a close below this support could tilt the advantage in favor of the bears.
ETH / USDT
Ether (ETH) fell at $1,605 on July 21. This shallow correction indicates that traders are not in a hurry to close their positions as they expect the upward movement to continue.
ETH/USDT daily chart. Source: TradingView
The bullish 20-day EMA ($1345) and the RSI near the overbought zone indicate an advantage for the buyers. The bulls will seek to push the price above the general resistance at $1,700. If they succeed, the ETH/USDT pair could gain momentum and rise to the psychological level of $2000.