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Bitcoin price rallies as end of year approaches

In Insights

This past week, the cryptocurrency market experienced a much needed bullish relief rally after an extended period of bearish price action.

On the global charts, the total market capitalization recovered to the USD130 billion range after falling to a low of USD101 billion last week.

Bitcoin

After a period of low-volume consolidation, Bitcoin kicked off this bullish market structure with a high volume green candlestick.

As you can see in the image below, demand on the buy-side was noticeably stronger than the sell-side. Though it’s too early to determine if this week’s price run is a bull trap, it’s important to keep in mind that we haven’t seen this kind of extended high-volume buy-side demand in a while.

Over the last couple of month months, bullish attempts to move price to the upside have been countered by bearish forces of equal or greater volume. That’s not really the case this time around.

With that said, BTC could retrace in the near future. After forming a double top at USD4,150 with declining volume, it looks like bulls may be out of steam for now.

This can be observed by the large bearish divergence between the double top in price action with a clearly falling RSI slope.

In summary, BTC experienced a 30% appreciation in value this past week with a break above the 200 EMA on the 1h chart. As price develops over the next few weeks, we’ll see if BTC is able to maintain support above this key moving average.

XRP and Ethereum

XRP is maintaining its position as the second largest cryptocurrency in terms of market capitalization, though the gap has definitely closed this past week. Over the last seven days, XRP saw gains of 25% while Ethereum managed a 35% increase.

 

Like BTC, ETH has formed a double top, while XRP is looking at more of a quadruple top with a bearish divergence between price and RSI. In the short term, I expect a small correction to the downside.

Again, this bullish structure is the result of a relatively high-volume action, this trend may continue over the next few weeks. Another thing to keep in mind is that the end of the year has been a historically bullish time of the year for the cryptocurrency market, with most recent bull runs starting sometime in November or December.

Past performance isn’t an indicator of future price action, but it’s interesting to note the timing of this upward move with significant volume backing it.

Bitcoin Cash

This week’s undisputed winner in terms of price action was BCH, which registered a phenomenal gain in excess of 200%. Bitcoin Cash started the week off at USD78 before hitting a high of USD232.

Bitcoin Cash’s controversial hard fork has led to some volatile price movements. Fundamentally speaking, not much has changed for BCH and BSV over the past week, so it’s difficult to know what really caused this gain.

It looks like BCH has been undergoing heavy accumulation for 10-12 days before the 200% move upward. The 4-hour chart for BCH/USD indicates a significant bullish divergence with RSI moving up as price creeped lower to a bottom of USD73.

At the moment, BCH is showing significant bearish divergence on the 1-hour chart, which suggests it may be due for a correction.

This content is not financial advice and should not form the basis of any financial investment decisions nor be seen as a recommendation to buy or sell any good or product. Trading cryptocurrency is complex and comes with a high risk of losing money, particularly if you trade on leverage. You should carefully consider whether trading cryptocurrencies is right for you and take the time to learn how trading works and decide how much money you are prepared to lose.

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