Bitcoin (BTC) has experienced a massive rally, especially since September when the price of BTC rose from $ 10,500 to $ 18,400 – a 75% increase in less than three months.
Furthermore, BTC / USD has risen almost 400% since March, making it the best performer in 2020, and is likely to surprise many investors completely.
Let’s take a look at the charts to see if the current rally is sustainable and if a reversal is expected in the near future.
Bitcoin reaches 1,618 Fibonacci and may soon
The weekly chart for Bitcoin shows huge gains during the previous period as the area reached a full-time high.
There was generally a clear zone of resistance around this rally, so this could serve as an incentive for investors to take some of the profits off the table.
But the most important thing is to reach the 1,618 Fibonacci expansion. The Fibonacci tool is a powerful indicator for identifying potential highs and lows, and 1,618 is without a doubt the most important level.
There are currently several arguments for a possible correction, including the fear and greed index which is approaching record levels.
There are several important price levels to look for if Bitcoin corrects before they hit $ 20,000. The initial benefit level for traders is around $ 16,000. The next levels are $ 13,500 and $ 11,600.
The total market value has reached $ 500 billion.
The total market value of cryptocurrencies has reached the next and final area of resistance before a possible new all-time high: $ 500 billion is likely to be a major obstacle to being overcome.
In particular, Bitcoin’s price is now only 10% below its full – time high and has already surpassed an ever higher market value.
Meanwhile, the total market value of cryptocurrency is still 35% below the all-time high. This indicates that Bitcoin is currently in the spotlight. Altcoins will probably start catching up later.
However, if the cryptocurrency market begins to correct, the most likely range for support / resistance (S / R) reversal is around $ 380-400 billion dollars. This level has not yet been tested again, as the S / R reversal here would definitely be a bullish signal for further progress.
This S / R volatility is very common in beef markets and is very useful for continuing the overall bullish trend.
Will the top bitcoin dominate in December?
Bitcoin dominance chart for the week. Source: TradingView
Historical data tells a lot about market cycles. So far, the fourth quarter of 2020 shows many signals similar to previous years. One of them is the increased dominance of Bitcoin in recent weeks, which has grown to 66%.
As long as Bitcoin is in the spotlight, altcoins will not work well. If bitcoin is resolved, altcoins are likely to continue to decline.
However, the heyday of altcoins can approach day by day. The main indicator to watch is the strength of the Ethereum (ETH) price versus Bitcoin and the depreciation of ETH / BTC.
The best conditions for altcoins are the slow increase in the bitcoin price. When that happens, most likely in the first quarter of 2021, strong momentum could push altcoin prices up across the board.