The year 2020 was a forgettable one for many reasons including lockdowns and economic restrictions. The shutdowns resulted in the worst economic crisis seen in decades. At the same time, most governments and central banks have responded with unprecedented fiscal stimulus and monetary expansion measures to revive their economies.
Therefore, institutional investors who are wary of potential inflation — and possibly even hyperinflation — as a result, are scrambling to hedge their portfolios with assets that can protect them from gradual currency depreciation. Until now, gold was considered the best store of wealth, and it has not disappointed investors as it is up about 24% year-to-date.
However, this year has seen an influx of institutional investors into Bitcoin, whose gains have been increasingly difficult to ignore, particularly versus gold and the S&P500, as shown in the chart above. Some institutions have diversified their portfolios with Bitcoin while others even reduced their gold holdings to invest in Bitcoin.
With Bitcoin’s massive 244% rally this year, portfolios of several investors who had purchased early will certainly outperform those without BTC exposure. This trend will force other investors to take note, increasing the possibility of Bitcoin’s rally to be more sustainable this time around, which may become a rising tide that may also lift other cryptocurrencies with it.
Therefore, let’s analyze the long-term charts of the top-10 cryptocurrencies and spot the critical levels that may pose stiff resistance. While such technical levels may not necessarily mark the top, they can be useful for traders to make informed decisions.
Bitcoin (BTC) is in a clear uptrend and is now in price discovery after breaking the all-time high made in 2017. Since clearing the $20,000 resistance, the rally has been sharp and that has pushed the relative strength index (RSI) deep into overbought territory.
BTC/USDT daily chart. Source: TradingView
History shows that deeply overbought levels on the relative strength index (RSI) have resulted in sharp corrections. Therefore, the bears may try to pull down the price from the $25,000 psychological resistance.
The critical level to watch on the downside is $20,000. If the bulls succeed in flipping this to support during the next major correction, it will act as a new floor. That is likely to prepare the BTC/USD pair for the next leg of the uptrend.
A strong bounce off $20,000 will open up the possibility of a rise to $30,000 and then to the next likely formidable resistance at $37,000.
Contrary to the bullish assumption, if the bears sink and sustain the price below $20,000 during the next correction, the aggressive bulls who have purchased above $20,000 may be forced to close their positions.
If that happens, the price may extend its decline to the 20-week exponential moving average ($15,958). The deeper the fall below $20,000, the longer it could take for the uptrend to resume.
Nevertheless, the current bull market is showing no signs of letting up. Moreover, six-figure Bitcoin price predictions for 2021 are becoming quite common with some traders even anticipating “conservative” targets of $200,000 by next December.
Ether (ETH) is in the process of forming a large rounding pattern that will complete on a breakout and close above $800. This reversal pattern has a long-term target of $1,500.
ETH/USDT daily chart. Source: TradingView
The bulls are currently attempting to push and sustain the ETH/USD pair above the $625 resistance and resume the uptrend. However, the rally is likely to encounter stiff resistance in the $800 to $1,000 zone.
If the price turns down from $800, the pair could enter a minor correction or consolidation for a few weeks. However, if the price remains above the 20-week EMA ($470), the possibility of a rise to $1,000 is high.
The bears will again try to stall the rally at $1000, but if the price does not fall below $800, it will boost the prospects of a breakout beyond $1,000. If that happens, the pair should retest the all-time high.
This bullish view will be invalidated if the price dips and sustains below the 20-week EMA.
XRP has been one of the most underperforming major altcoins in the past few months. The price is currently stuck in a large range of $0.10 to $0.80. The bulls attempted to propel the price above $0.80 but failed. That resulted in aggressive selling and the price has completely retraced the November gains.
XRP/USDT daily chart. Source: TradingView
The flat moving averages and the RSI just below the midpoint suggest that the bulls have lost their grip and the XRP/USD pair could stay inside the large range for a few more months.
In a large range, the bulls buy the dips aggressively and sell near the resistance. To change this trend, the price will have to either break above or below the range.
If the bulls can push the price above the $0.80 to $1 overhead resistance zone, the XRP/USD pair may signal the start of a possible uptrend, which could surprise with a run to $2.50.
However, the bears will aggressively defend the overhead resistance zone, particularly as the negative news of the SEC lawsuit against Ripple is already resulting in big losses for XRP holders. Therefore, the XRP/USD pair could remain in the given range for most of 2021.
Litecoin (LTC) completed a rounding bottom pattern after the bulls pushed the price above the $80 resistance. This reversal setup has a minimum target objective of $136, just below the stiff resistance at $145.6725.