Bitcoin and Ethereum almost higher than ever: What’s the next trade?

Following the euphoric peak of the asset class at $ 900B in January 2018, the value of all cryptoassets went into a deep winter, contracting nearly 90% to just $ 100B by the end of that year. While it took a while for traders to lick their wounds and jump back in, we have finally seen Bitcoin and the broader crypto market outperform from three years ago and the eclipse of the widely watched $ 1 trillion market cap level.

Now trading at more than double its previous price peak and, the # 2 cryptoasset, reaching its highest ever level as we go to press, traders are wondering how to capitalize on this asset class. Below, we list down the current technical and underlying factors for the two largest cryptoassettes:

Bitcoin

With major economies around the world engaged in unprecedented experiments in monetary and fiscal policy (“money printing” and “deficit spending” at the same time), Bitcoin’s programmatic fixed supply is more attractive than ever. Four years “halving Bitcoin” last year cut the new supply of Bitcoin to just 6.25 BTC per ten minutes, taking Bitcoin’s “inflation rate” to just 1.8%, lower than that of most major currencies .

Since the last peak more than three years ago, programmers have dramatically improved Bitcoin functionality, building enhancements including the Lightning Network tier-2 for small transactions and enhancements to privacy and convenience. At the same time, the asset is now more accessible to retail investors than ever before, with options to buy from Cash Square, Robinhood, and PayPal app, among other big name services.

As for the bitcoin price, momentum stays firmly behind the bulls. The cryptoasset has almost quadrupled in the past four months, highlighting the inherent volatility of the asset class, but the price action so far suggests rates may have to run further. As the chart below shows, the recent consolidation has alleviated the state of over-thinking in the daily RSI indicator, possibly clearing the way for another higher leg.

In terms of price implementation, Bitcoin is currently consolidating within a “bullish pennant” formation, suggesting prices could exceed $ 50,000 in short order if we see a bullish cut in the coming days. One the other hand, a lower cut of this pattern would point to a deeper price to levels below $ 30k, though it would likely take a more serious fall to eliminate the established increase:

BTC / USD Daily

Source, all charts: TradingView, GAIN Capital

Ethereum

The world’s second-largest cryptoasset, Ethereum, has come a long way from three years ago, when it was most famous for providing the infrastructure that fueled the Initial Cash Offer (ICO) boom. At a high level, the Ethereum blockchain allows developers to use smart contracts to create decentralized apps (dApps). It was significantly upgraded to Ethereum 2.0 last year, making the network faster and more secure. Currently, the dominant narrative driving Ethereum is the growth of Decentralized Finance (DeFi) applications, which facilitate peer-to-peer financial transactions such as banks.

Technically speaking, Ethereum’s price has outperformed Bitcoin significantly over the past year, with ETH / USD rising below $ 100 in the depths of the COVID-19 pandemic in Q1 last year to experience a record high near $ 1300 from writing. Looking ahead, it’s hard to bet against the strong bullish momentum in Ethereum.

If they can confirm its cut above the January 2018 peak near $ 1400, bulls can quickly turn their eyes upwards toward $ 1800 (Fibonacci extension 127.2% of fall 2018), $ 2000 (key psychological level) or even $ 2250 (Fibonacci extension 161.8%). Of course, this relatively new asset class remains highly volatile, so prices could see sharp sales back to the triple digits if they can’t clear resistance near $ 1400, but once again, institutional and retail traders can be keen to buy any short-term dips in the cryptoasset market:

ETH / USD is Weekly

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