Market Update - Week of August 16th, 2021

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Bitcoin Eyes $50,000 and Beyond While Several Large-Caps Reach Fresh Highs

The fundamentals for Bitcoin are continuing to improve as the leading cryptocurrency looks set to post a 5-week winning streak, the longest series of green candles on the weekly timeframe since October 2020. A rise to $50,000 and beyond is on the cards for bitcoin if this week’s high at $48,000 is overcome. Elsewhere in the cryptocurrency market, several large-caps reached all-time highs and Ethereum regained the important $3,000 handle. Active addresses on the Bitcoin network continue to increase this week in what is a positive sign for the market. The 7-day average of active addresses rose just above 870,000, the highest level since June 19th, compared to 840,000 last week. Source: CoinMetrics Addresses with a balance of at least 1 BTC are also reaching fresh highs. This metric bottomed on June 21st (a day prior to the 2021 low near $28,000) and has increased since then, improving the outlook for Bitcoin. There are now approximately 805,000 addresses holding at least 1 BTC, up from 793,000 on June 21st, suggesting investors are starting to become bullish again. The daily chart below illustrates a new uptrend is forming for Bitcoin. On August 13th, the price of bitcoin closed above the Ichimoku cloud for the first time since mid-May. However, the breakout was rejected with bitcoin falling to a low of $43,935 on August 19th before reversing and closing above the Ichimoku cloud once more. Source: TradingView With a second close above the cloud, traders should look for a break above Bitcoin to establish a new uptrend with a target just above $56,000, which is the next major resistance suggested by the nearest peak of the Ichimoku system’s lagging line (highlighted on the chart above). The conversion line (blue) should offer support going forward and currently lies at $42,745. The base line (red) also offers an important support level at $38,395, so traders could set their bids at these levels to get in on the uptrend. While the Ichimoku system is only just beginning to signal an uptrend for BTC-USD, the Alligator system highlighted the start of an upward trend on July 24th with the price closing above the Alligator indicator. The Williams Alligator indicator is similar to using three smoothed moving averages to more accurately identify trend changes. Source: TradingView Each time the price breaks above a fractal resistance level when trading above the Alligator, the system suggests to go long bitcoin. For example, the system would have suggested to go long at $41,341 and $42,614 (shown by the green rays). The next key level to pay attention to is the high from August 14th, where a break above this level at $48,190 should open up further gains for bitcoin. After the $48,190 level, the most recent fractal resistance above the Alligator and the current price is at $59,603 - shown by the yellow ray and serving as a medium-term target for long positions. The upward trend is not invalidated until bitcoin closes below the Alligator, which would indicate a change in the overall trend. Let’s now examine the order flow for Bitcoin on Coinbase. We can see that the upward move on August 19th and the early hours of August 20th took out two sell walls around $46,000 and $47,000. The chart below shows that a large quantity of sell orders are placed at $48,000, a key psychological resistance. There’s no significant buy wall until $45,000, however, there is some bidding interest at $46,700 which has just been entered onto the order book. Source: TradingLite

Several Large-Caps Reach All-time Highs

While Bitcoin is on the road to recovery, several altcoins hit all-time highs this week including Cardano’s ADA token, Solana’s SOL token and Terra’s LUNA. The chart below shows how high ADA could possibly go. Drawing the Fibonacci extension tool for the upward move that occurred during April-May 2021, the targets for long positions on ADA-USDT lie at $2.89 and $3.42. Source: TradingView The chart above also shows a bullish saucer setup on the daily timeframe, which suggests that another bout of bullish momentum may come into play for ADA. If the awesome oscillator remains green on Saturday August 21st, then we’d get a buy signal tomorrow once the high from August 20th is broken and it’s likely we’ll see fresh highs near $2.89 or $3.42. When looking at the order flow data for ADA, we can see that there’s strong support at $2.43 on Binance, with a bid for almost 1 million ADA in place since the early hours of August 20th. To the upside, two large sell wall lie at $2.55 and $2.60. Source: TradingLite While large-caps like ADA, LUNA and SOL have hit all-time highs this week, Ethereum has yet to test the 2021 high at $4,383. The chart below shows that there’ll likely be a test of this level if the price of Ether can break above $3,341, the fractal high from August 16th. With no fractal resistances between $3,341 and $4,383, a clear break of the most recent fractal level (highlighted by the green ray) would open up an attempt at the all-time high (highlighted by the yellow ray). Source: TradingView Looking at the order flow for Ethereum on Coinbase, we can see there’s significant selling interest around the $3,300 level and $3,350. The next nearest buy wall is at the psychological $3,000 handle. Aggressive buying has dominated over the past few days, as shown by the Volume Delta indicator but currently we see that neither buyers nor sellers are aggressively entering the market. The lack of aggressive buying or selling suggests we may see some sideways action before a new short-term trend is established. Source: TradingLite In summary, the fundamentals and technicals for Bitcoin point to an advance above $50,000 and target May’s high near $59,000 if the $48,170 level is broken. Bullish momentum is intensifying for Cardano’s ADA, with targets at $2.89 and $3.42. A key level to watch for Ethereum will be the $3,300 handle and $3,350, as a break above these prices would signal the beginning of a drift towards the all-time high at $4,384.
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