Bitcoin and Ethereum are in the green in high time frames. The first and second cryptocurrencies by market cap appeared to be bouncing back well after months of sustained selling pressure.
At the time of writing, BTC is trading at $ 49,319, up 1.4% on the daily chart. Previously, Bitcoin was rejected when it returned north of $ 50,000.
BTC price lost its initial level of support at $ 49,800 and is now in danger of reverting to the mid-range of its current level of around $ 46,000.
BTC is moving sideways after being rejected on the daily chart. Source: BTCUSD Tradingview
This could be positive for Ethereum as the second cryptocurrency by market capitalization continues to outperform Bitcoin. Too much pressure on the BTC price could steal the shine from ETH.
At the time of writing, Ethereum is trading at $ 3,773, gaining 1.9% and 16.8% on the daily and weekly charts, respectively.
ETH with bullish momentum in the daily chart. Source: ETHUSD Tradingview
Investment firm QCP Capital made a market update claiming that Ethereum has “started moving towards its target” on the ETH / BTC trading pair set at 0.0850 as seen below. This chart appears bullish on Ethereum as it approaches the end of 2021.
Ethereum dominates Bitcoin in the ETH / BTC trading pair. Source: QCP Capital by telegram
Currently, the bullish price action has occurred on both Ethereum and Bitcoin without much fluctuations in the funding rates for derivatives. For ETH / USD, private investors appear to be in control, claims QCP Capital.
These investors jumped into ETH due to the positive catalytic events in the non-fungible token (NFT) sector, the EIP-1559 update and the “constant buying of calls in large blocks”. However, something could change for ETH.
The rally could attract a new wave of speculators and short-term investors as borrowing rates began to turn positive after the price of ETH rose above $ 3.8000. The company said:
(…) the most recent pressure on 3800 begins as we see some funding pressure as leveraged players move up. Despite the crucial rally, the market remains cautious about possible downside risks.
Potential scenarios for Bitcoin and Ethereum
The investment firm added that there is a possibility of a bitcoin reversal if the price of BTC continues to trade between $ 48,000 and $ 52,000. As long as it does not exceed these levels, there is potential for a reversal.
For Ethereum, the bullish price action with an increase in volatility could prove unsustainable:
ETH front-end risk reversals have violently flipped onto the put side. At a higher speed of this movement, a sharp mean reversion movement would not be too surprising.
Much of the next price action may be determined by Bitcoin, its performance and dominance in the market. With that in mind, QCP Capital indicated that $ 51,000 will act as a major resistance with Relative Index Strength (RSI), a momentum indicator that is trending downward.
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