Written by Metal Team

On February 1, 2021

Market Report February 1 2021

Bitcoin (BTCUSD) (Monthly)

Bitcoin came out of the gate with a lot of steam in January but ultimately couldn’t keep the momentum going for the entire month. Yesterday’s monthly close left an upper wick of $8,800, which shows an initial 21% price rejection.  Despite recent euphoria, a retest of lower support after the last 4 months of “up only” seems in order and would be healthy for bullish continuation.

Ethereum (ETHUSD) (Monthly)

Ethereum is still lingering below its 2018 all-time-high of ~$1,440, mirroring the price action on lower time frames seen in mid-December from Bitcoin.  With several near breakouts, traders seem to be losing patience with the top altcoin, as they see smaller-cap alts run for huge gains day after day.  New highs still seem on the horizon, but if BTC does drop considerably, there’s almost no doubt that Ethereum will be dragged down to lower USD prices to reclaim some support as well.

Fundamentals & Correlations

Bitcoin dominance remains well over the 51% level needed for a true alt season, or “altszn”, as many call it.  Many traders are actively trading alts as they feel the season has begun but should be cautious as Bitcoin looks due for a retrace.  Alt traders should also take caution as Bitcoin could rip upwards, and in its typical fashion, causing alts to bleed temporarily. 

When Bitcoin is dominating market share like it is, any substantial move in price from the king will typically lead to massive altcoin sell-offs. 

The US Dollar Currency Index (DXY) still shows the classical “double-top” pattern on the monthly chart which could lead to further downside.  As a result, we could see this external factor increase the bullishness of all assets, including Bitcoin and Ethereum. 

On lower timeframes, the DXY sits on support and could see a temporary reversal, which would cause most assets to see a drop in USD value.

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