Bitcoin (BTC) has started the last week of the year on a soft note, indicating that the bulls are not hurrying to buy the dip. Analysts are divided about Bitcoin’s short-term price action. Some expect a strong rally leading into United States President-elect Donald Trump’s inauguration in January, while others anticipate the volatility to increase. BitMEX co-founder Arthur Hayes voiced a contrarian view in his blog post on Dec. 17, where he said the markets are likely to witness a “harrowing dump” around Trump’s inauguration day.
While short-term traders may be waiting for the uncertainty to clear before buying, MicroStrategy has continued its Bitcoin buying spree for the eighth successive week. The business intelligence firm announced the purchase of 2,138 Bitcoin between Dec. 23 and Dec. 29 at an average price of roughly $97,837.
Daily cryptocurrency market performance. Source: Coin360
Bitcoin’s historical performance in January has been a mixed bag, with the average rise being a meagre 3.35%, according to CoinGlass data. However, a positive sign is that in the past five years, Bitcoin has closed January in the red only once in 2022, when it fell 16.68%.
What are the crucial support levels to watch out for in Bitcoin and the altcoins? Let’s analyze the charts to find out.
S&P 500 Index price analysis
The S&P 500 Index (SPX) rose above the 20-day exponential moving average (5,983) on Dec. 24, but the bulls could not sustain the higher levels.
SPX daily chart. Source: Cointelegraph/TradingView
The bears pulled the price back below the 20-day EMA on Dec. 27 and extended the decline below the 50-day simple moving average (5,941) on Dec. 30. Buyers are expected to defend the 5,853 level with vigor because if the level breaks down, the index will complete a bearish head-and-shoulders (H&S) pattern. This setup has a target objective of 5,606.
Buyers will have to push and maintain the price above the 20-day EMA to seize control. The index may then climb to 6,050.
US Dollar Index price analysis
The US Dollar Index (DXY) is witnessing a tough battle between the bulls and the bears near the 108 level.
DXY daily chart. Source: Cointelegraph/TradingView
The upsloping moving averages and the RSI in the positive territory indicate advantage to buyers. If the price rises above 108.55, the index will attempt a rally to 111.
The critical support to watch on the downside is the 20-day EMA (107). If the price rebounds off the 20-day EMA, the bulls will again try to drive the index above 108.55.
On the other hand, a break and close below the 20-day EMA will suggest that the bulls have given up and are booking profits. That increases the risk of a pullback to 105.
Bitcoin price analysis
Bitcoin is witnessing profit booking by select traders, increasing the possibility of a drop to the strong support at $90,000.
BTC/USDT daily chart. Source: Cointelegraph/TradingView
The moving averages are on the verge of a bearish crossover, and the relative strength index (RSI) is in the negative territory, indicating that the bears are attempting a comeback. If buyers want to prevent a downside, they will have to fiercely defend the $85,000 to $90,000 zone. If they do that, the BTC/USDT pair may spend some time inside a large range.
Contrarily, a break below $85,000 could tempt several traders to book profits. That could sink the pair to $73,777.
Ether price analysis
Ether (ETH) has been oscillating inside a large range between $2,850 and $4,094 for several days.
ETH/USDT daily chart. Source: Cointelegraph/TradingView
The bulls are trying to start a recovery from the uptrend line but will have to face stiff resistance at the 20-day EMA ($3,494). If the price turns down sharply from the 20-day EMA, the ETH/USDT pair could plunge below the uptrend line. That could pull the pair to the $3,000 to $2,850 zone.
Buyers will have to drive and maintain the price above the 20-day EMA to invalidate the bearish view. The pair may then rally toward $4,094.
XRP price analysis
XRP (XRP) has pulled back to the support line of the symmetrical triangle pattern, where the bulls are likely to step in.
XRP/USDT daily chart. Source: Cointelegraph/TradingView
If the price rebounds off the support line and breaks above the 20-day EMA ($2.19), it will signal that the XRP/USDT pair may remain inside the triangle for a few more days.
On the contrary, a break and close below the triangle will suggest that the pair may have topped out in the near term. There is support at the 50-day SMA ($1.89), but if it cracks, the pair may slide to $1.63.
The bulls will be back in the driver’s seat if they push and maintain the price above the resistance line.
BNB price analysis
BNB (BNB) has been trading between the 20-day EMA ($692) and the overhead resistance of $722 for a few days, indicating a tough battle between the buyers and sellers.
BNB/USDT daily chart. Source: Cointelegraph/TradingView
If the price closes below the 20-day EMA, it will suggest that the bulls have given up. That will bring the large $685 to $722 range into play. Buyers are expected to fiercely defend the $635 level because a break below it may start a deeper correction.
Alternatively, if the BNB/USDT pair turns up from the current level and breaks above $722, it will signal that the bulls have overpowered the bears. That could start an up move to $761 and later to $794.
Solana price analysis
Solana (SOL) is getting squeezed between the 20-day EMA ($200) and the uptrend line for the past few days.
SOL/USDT daily chart. Source: Cointelegraph/TradingView
The downsloping 20-day EMA and the RSI in the negative territory indicate advantage to sellers. If the bears pull the price below the uptrend line, the SOL/USDT pair may decline to $155 and later to $133.
Instead, if the price turns up from the current level or the uptrend line and breaks above the 20-day EMA, it will signal that the selling pressure is reducing. The pair may then climb to the 50-day SMA ($220).
Dogecoin price analysis
Dogecoin (DOGE) has managed to stay above the $0.30 level, but the bulls are struggling to pierce the 20-day EMA ($0.34).
DOGE/USDT daily chart. Source: Cointelegraph/TradingView
The failure to rise higher could bring another wave of selling by the bears. If the $0.30 level gives way, the DOGE/USDT pair may drop to the 61.8% Fibonacci retracement level of $0.27 and eventually to $0.23.
This negative view will be invalidated in the near term if the bulls push the price above the 20-day EMA. The pair may then climb to the 50-day SMA ($0.38), where the sellers are expected to mount a strong defense.
Cardano price analysis
Cardano (ADA) has been trading below the neckline of the H&S pattern, signaling that the bears have maintained their pressure.
ADA/USDT daily chart. Source: Cointelegraph/TradingView
The ADA/USDT pair could drop to the $0.80 to $0.70 support zone, where the bulls are expected to mount a strong defense. If the bears prevail and sink the price below the support zone, the pair may collapse toward the pattern target of $0.50.
If buyers want to prevent the downside, they will have to push and maintain the price above $1. If they manage to do that, several aggressive bears may get trapped, resulting in a short squeeze.
Avalanche price analysis
The sharp pullback and the failure to start a rebound suggest that Avalanche (AVAX) may have topped out in the short term.
AVAX/USDT daily chart. Source: Cointelegraph/TradingView
The bears will try to strengthen their position by pulling the price below $33.50. If they succeed, the selling could pick up, and the AVAX/USDT pair may tumble to $32 and subsequently to $30.50.
Contrary to this assumption, if the price turns up from the current level and rises above the 20-day EMA ($40.55), it will suggest demand at lower levels. The pair may then rally to $42.50.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
