Bitcoin (BTCUSD) (3-day/8-hour comparison)
Bitcoin’s Christmas Rally past the $50k level was short-lived, and even with some brief moments of promise, bears appear to be in control for now.
As price hovers in the mid $40ks, low $40ks seems inevitable at this point. For now, there seems to be enough demand in the $46k area to prevent this from happening, and we could see a rally towards $53k first which aligns with our 8-hour chart’s red zone. A rally as high as $56k could still result in a harsh rejection to revisit the $40k low, and this would certainly cause a lot of pain and fear in the market.
Until the price can get above $60k and hold it, bulls should proceed with caution.
Ethereum (ETHUSD) (3-day/8-hour comparison)
Ethereum has looked fairly weak compared to Bitcoin, and a lower test towards $3200 seems likely at this point. This would align with both our 3-day and 8-hour charts, and we’d expect buyer demand to really step in at that point to send ETH to new highs.
Similar to Bitcoin, Ethereum looks a bit dicey until we see a new ATH hit, there are several major resistance points needing to be reclaimed so each move up could be a potential trap.
Fundamentals & Correlations (Weekly)
BTC dominance (BTC.D) remains stagnant, allowing altcoins to have mini-rallies daily, with several enjoying 20%+ green days recently. As we keep saying every week, this could be fleeting, and once BTC dominance reverses, it’ll happen fast, sucking the life out of alts as BTC rallies. This seems more likely to happen after BTC revisits the low $40ks, but it could of course happen at any time.
The US Dollar Index (DXY) still sits just beneath a high-timeframe resistance level, without any sign of rejection. This could spell trouble for BTC prices if it does break through the resistance, and that would likely trigger the drop we are looking for. A drop in DXY first would probably push BTC towards $53k, where we expect a rejection.
