Crypto Update: Bitcoin and Ethereum Breaking Out
Today is an auspicious day for cryptocurrencies. Hours before writing this post, many traders were throwing everything but the kitchen sink to short major cryptos such as Bitcoin (BTC/USD), and Ethereum (ETH/USD). These bears were betting against yearly lows and historic supports. If these areas were wrecked, they would have made tons of money in the ensuing panic. If the plan did not pan out, they would not lose as much considering that markets still look bearish.
We bet they could have never been so wrong.
Just as everyone’s sleeping, the cryptocurrency world was wide awake and busy with massive buying. In a matter of minutes, the coin market capitalization grew by as much as $20 billion. In short, countless short positions were annihilated as many coins came alive. In this article, we show how Bitcoin and Ethereum are breaking out with a vengeance.
Three days ago, we published a comparison of the 2014 and 2018 bear markets. In the article, we asserted that there’s no evidence that Bitcoin has more downside potential. In addition, we showed that Bitcoin is staying above its long-term support.
Today, the effort of those who bought last week’s dip is being rewarded. We are seeing Bitcoin in the midst of a huge rally as it breaks out of the large falling wedge on the daily chart.
Daily chart of BTC/USD
Bitcoin rallied to as high as $7,788 today with volume that’s over 300% of its daily average. Keep in mind, we’re just about halfway through the day (UTC) so we can expect more volume in the coming hours. The price action has finally enabled the pair to convincingly breakout of the falling wedge on the daily chart.
Currently, BTC is pulling back and some might say that this is another pump and dump routine. However, the pullback can be attributed to buyers at $6,250 support taking profits. As long as Bitcoin stays above $6,450, the breakout should remain valid.
At the start of this month, we noted that Ethereum could reverse its trend by breaking out of a symmetrical triangle pattern on the 4H chart. Back then, conditions looked ripe for a breakout. Ethereum was in oversold territory and volume was picking up. Unfortunately, the market breached the triangle support and slipped to $188.35 on October 11.
At this point, many on social media, especially on Twitter, called to short Ethereum. With the support of $200 broken, bears predicted an Ethereum that’s worth less than $100. Today, the market proved them wrong. ETH/USD moved as high as $242.62 with volume that’s over 160% of its daily average. Again, there’s a lot of time left today so we can expect volume to swell in the coming hours.
Daily chart of ETH/USD
At this point, we can say that Ethereum is in the midst of breaking out from the large falling wedge on the daily chart. This breakout signals the departure of the market from the pattern that has kept it bearish for most of the year. The breakout should remain valid as long as the market stays above $205.
Bears who made bets against yearly lows and historic supports are seeing their positions wrecked. Just as Bitcoin and Ethereum looked dead in the water, both cryptos mustered massive rallies to break out of patterns that have kept them bearish. Are we seeing the early stages of a new bull run? It sure looks like it.