Bitcoin is on the rise against the U.S. dollar, but a look at all of its relevant trading pairs (LTC/BTC, ETH/BTC) suggests the move to $20,000 could take longer than expected.
The world’s largest cryptocurrency by market capitalization has traded more or less sideways over the last few days as the alternative currencies rallied sharply to new highs. But, as discussed yesterday, the lackluster action in BTC could be due to the rotation of money from BTC (large cap) and into alternative currencies (or so-called small caps).
This flow of money is best represented by the bullish break seen in cross cryptocurrency charts – i.e. ETH/BTC, LTC/BTC, BCH/BTC and XRP/BTC. For example, a rally in ETH/BTC could be an indication that the money is flowing out of bitcoin and into ether (ETH).
That said, a sharp pullback in the altcoins seems to have put a mild bid under bitcoin (BTC) today.
As per CoinMarketCap, bitcoin (BTC) has appreciated 7.57 percent in the last 24 hours. Meanwhile, ether (ETC), bitcoin cash (BCH) and litecoin (LTC) have dropped 6 percent, 8 percent, and 10 percent, respectively.
While tables appear to have turned in favor of bitcoin again, the charts suggest relief could be transient.
ETH/BTC chart
The above chart (prices as per Coinbase) shows:
- A sharp rally from the low of BTC 0.0231 (Dec. 7 low) to BTC 0.0452 (Dec. 14 high) indicates the pair has bottomed out.
- The drop to BTC 0.0371 is unlikely to last long as the 5-day MA is curled up in favor of the bulls and the 10-day MA has bottomed out (has shed bearish bias).
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- ETH/BTC is likely to regain bid tone and target the falling channel resistance seen at BTC 0.05. A close above the same would confirm the long-term bearish-to-bullish trend change.
LTC/BTC chart
The above chart (prices as per Coinbase) shows:
- A long-term bearish-to-bullish trend change, courtesy of high volume breakout (falling trend line breached).
- The 5-day MA and 10-day MA are curled up in favor of the bulls.
- The pullback from the high of BTC 0.02498 (Dec. 12 high) lacks substance, i.e. volumes have dropped. It looks more like a healthy pullback and the broader outlook remains bullish.
LTC/BTC 4-hour chart
- A rebound from the rising trend line support would add credence to the bullish case put forward by the daily chart.
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- The pair is likely to revisit the recent high of BTC 0.02498 (Dec. 12 high). The upward sloping 10-day MA indicates the dips below BTC 0.012 could be transient.
BCH/BTC
The above chart (prices as per Bitfinex) shows:
- The falling channel is still intact, but the recovery from the low of BTC 0.068 (Dec. 8 low) to BTC 0.1289 (Dec. 14 high) has helped the 5-day MA and 10-day MA bottom out (shed bearish bias).
- The bullish 5-day MA and 10-day MA crossover (short-term average cuts long-term average from below, is considered as a bullish sign) favor further upside in the cross pair.
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- The pair is seen moving higher to BTC 0.1589 (falling channel resistance) over the next few days. A close above the same (bullish channel breakout) would confirm a long-term bearish-to-bullish trend change.
XRP/BTC
The above chart (prices as per Bittrex) shows:
- The tide has turned in favor of the bulls, courtesy of a high volume bullish breakout and the upward sloping 5-day MA and 10-day MA.
Conclusion
As the charts show, a recovery in ETH/BTC, LTC/BTC, BCH/BTC and XRP/BTC from intraday lows is already weighing over bitcoin.
As per CoinDesk’s Bitcoin Price Index (BPI), bitcoin is now trading at $17,760, down from the record highs above $18,000 hit earlier today.
The bullish outlook for ETH/BTC, LTC/BTC, BCH/BTC and XRP/BTC indicates the rotation of money out of BTC and into alternative currencies is likely to continue in the next week.
It also means bitcoin could have a tough time staging a sustained rally to $20,000. This view gels well with the fact that investor community is warming up to the idea of a larger pullback in bitcoin following the BTC futures listing on the CME this Sunday.
Trading charts via Shutterstock