Bitcoin price remains under pressure but select altcoins like XRP, DOT, XLM and SOL are showing signs of resuming their uptrend.
Bitcoin (BTC) has been struggling to rise above the $50,000 mark, which could have resulted in traders dumping their Bitcoin positions to invest in altcoins. Glassnode data suggests that whale addresses owning more than 1,000 BTC have reduced from about 2,500 in February to 2,100.
If large investors continue to sell, Bitcoin could witness a sharp correction until institutional investors step in and buy at lower levels. While MicroStrategy announced the purchase of 271 Bitcoin on May 13, other existing institutional investors appear to be adopting a wait and watch approach.
In an interview with Financial NewsSquare, Square chief financial officer Amrita Ahuja said, at this point, the firm does not have any plans to add Bitcoin to its existing haul of roughly 8,027 Bitcoin purchased in October 2020 and February of this year.
If other institutions also stay away from buying at current levels, Bitcoin’s price is likely to slide further. However, Fundstrat Global Advisors managing partner Tom Lee believes Bitcoin’s rally still has legs. Lee has increased his year-end Bitcoin target from $100,000 to $125,000.
With action becoming coin specific, let’s look at the top-5 cryptocurrencies that may lead the charge in the next few days.
The bulls again purchased the dip to the neckline of the head and shoulders pattern today but the long wick on the candlestick suggests profit-booking at higher levels. Bitcoin’s sentiment seems to have changed from buy on dips to sell on rallies.
If the bears sink and sustain the price below the neckline, the H&S pattern will complete. This setup has a target objective at $31,653.73. The downsloping 20-day exponential moving average ($53,297) and the relative strength index (RSI) below 36 indicate the bears are in control.
However, the bulls are unlikely to give up easily. They will try to stall the decline in the $43,000 to $40,000 support zone but if they fail, the decline could be sharp.
Contrary to this assumption, if the price turns up from the current level and rises above $51,550, the BTC/USDT pair may rally to the 20-day EMA. A breakout and close above the $60,000 resistance will suggest the bulls are back in the game.
The rebound from $46,435.02 fizzled out at the 20-EMA. This suggests the sentiment is negative and traders are selling on rallies to the 20-EMA. If the bears sink the price below the neckline, the selling could intensify.
However, if the bulls again defend the neckline, the pair may attempt to rise above the 20-EMA. If that happens, the rally could extend to $51,538.22 where the bulls are likely to encounter stiff resistance.
If the price turns down from this resistance, the pair may consolidate between $46,000 and $51,500 for a few days.
XRP is currently trading inside a symmetrical triangle, which usually acts as a continuation pattern. If the bulls can drive the price above the resistance line of the triangle, the altcoin could retest the 52-week high at $1.96.
A breakout and close above $1.96 could start the next leg of the uptrend that may reach $2.68. The RSI has risen into the positive territory but the 20-day EMA ($1.43) is yet to turn up, which suggests that bears are likely to defend the resistance line aggressively.
If the price turns down from the resistance line, the XRP/USDT pair could extend its stay inside the range for a few more days. The pair could turn negative if the bears sink and sustain the price below the triangle. Such a move may pull the price down to $0.88.
The price has dipped to the moving averages on the 4-hour chart. If the pair rebounds off the current levels with strength, it will suggest buying on dips. The bulls will then try to push the price above the triangle.
Alternatively, if the bears sink and sustain the price below the moving averages, the pair could drop to $1.35 and then to the support line of the triangle. A break below this support could signal advantage to the bears.
Polkadot (DOT) broke out and closed above the overhead resistance at $44 on May 14. The bulls continued the momentum and pushed the price to a new all-time high at $49.78 on May 15 but could not sustain the higher levels. Profit-booking has pulled the price back below the breakout level at $44.
If the bulls do not give up much ground from the current levels, it will suggest buying on dips. The DOT/USDT pair could then make one more attempt to rise above the psychological level at $50.
If that happens, the pair could start the next leg of the uptrend that may reach $63.68. The marginally upsloping 20-day EMA ($39.54) and the RSI in the positive territory suggest the path of least resistance is to the upside.
Contrary to this assumption, if the price sustains below $44, the pair could drop to the moving averages. A break below this support could pull the price down to $32.50.
The 4-hour chart shows the bears pulled the price below the 20-EMA but the bulls are attempting to reclaim the support. The buyers will have to push the price above $47 to regain the advantage. If they succeed, a retest of $50 is likely.
On the other hand, if the price fails to climb above the 20-EMA, it will suggest a lack of buying support. That could pull the price down to the 50-simple moving average. The flattening 20-EMA and the RSI near 50 suggest a balance between supply and demand.
Stellar Lumens (XLM) is attempting to start a new uptrend. The bulls purchased the dip to the 20-day EMA ($0.61) on May 13 and pushed the price to a new 52-week high at $0.79 today. However, the long wick on the day’s candlestick indicates profit-booking at higher levels.
If buyers can sustain the price above $0.73, the XLM/USDT pair could rally to $0.85 and then to $1. The upsloping moving averages and the RSI above 63 indicate that bulls have the upper hand.
Contrary to this assumption, if the price sustains below $0.73, the pair could drop to the 20-day EMA. A strong rebound off this support will suggest the sentiment remains positive. The bulls will then make one more attempt to resume the uptrend.
This positive view will invalidate if the price breaks below the 20-day EMA. Such a move will suggest that traders are closing their positions in a hurry and not buying the dips. That could result in a drop to the 50-day SMA ($0.53).
The 4-hour chart shows the formation of an inverse head and shoulders pattern. This bullish setup has a target objective at $0.90. The upsloping 20-EMA and the RSI in the positive territory suggest that bulls are in command.
During strong uptrends, corrections are likely to be shallow. Therefore, the current dip may find support at $0.72. A strong bounce off this level could increase the possibility of the resumption of the uptrend.
This bullish view will invalidate if the price dips and closes below the neckline. Such a move could trap the bulls, resulting in long liquidation. The pair may then decline to $0.55.
Solana (SOL) had been range-bound between $40 and $49.99 for the past few days. A tight consolidation near the high is a positive sign as it shows that traders are not booking profits in a hurry.
The 20-day EMA ($42.86) is sloping up and the RSI has risen above 65, indicating the path of least resistance is to the upside.
If the bulls can sustain the price above the psychological level at $50, the SOL/USDT pair may resume its uptrend. The next target objective on the upside is $60 and then $69.
On the contrary, if the price fails to sustain above $50, the pair may re-enter the range and extend its consolidation for a few more days. This positive view will invalidate if the pair breaks below $40.
The 4-hour chart shows the bulls pushed the price to a new all-time high at $52.60 today but the long wick on the candlestick indicates profit-booking at higher levels. The price has dipped back below $50 but it may find strong support at $46.
A strong rebound off this level will suggest that traders are buying on dips. The bulls will then again try to resume the uptrend. The rising 20-EMA and the RSI near the overbought zone suggest advantage to the bulls.
Contrary to this assumption, if the bears sink the price below $46, the pair may drop to the 20-EMA. Such a move will suggest aggressive selling above $50 and that could keep the pair range-bound for a few more days.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk, you should conduct your own research when making a decision.