Crypto Frontline

Weekly Crypto Analysis December 28th, 2020 – January 3rd, 2021

Weekly Crypto Analysis December 28th, 2020 – January 3rd, 2021
December 27
10:53 2020

BTCUSD (Coinbase)


Bitcoin defied the resistance area we’ve highlighted last week as well as the divergence with the RSI. Even though valuations managed to almost reach $28,000, there is now a larger divergence in play and that should put late buyers on hold, given there is a higher probability of a sharp retracement lower.

The next resistance area is around $28,000 – $28,500 and if buyers break above it as well, then $30,000 will be next in line. However, we think there is limited upside potential from the current price level and sellers might start to gain some ground.

Prices are moving on low liquidity so smaller volumes can generate spikes. Keep in mind that the same thing can happen on the downside and it would be appropriate for market participants to remain cautious. If the sellers start to gain control, a retracement towards $24,000 shouldn’t be ruled out, considering how over-stretched valuations are right now.

ETHUSD (Kraken)

ETHUSD technical analysis

Ether is underperforming Bitcoin for the week, flat at the time of writing, but still, managing to recover some earlier losses. The price action continues to trade inside an ascending channel and that keeps the short-term bias titled towards the buy-side. As long as the structure is not broken, we suspect ETH can reach new highs.

The most notable near-term resistance levels are located around $700 and $750, which could coincide with the upper line of the channel, depending on how fast the price can rise. However, the selling seen at the beginning of the week was quite sharp and might signal a choppier period ahead, until 2021 will see investors/traders back at their desk full-time.

Be aware of the high uncertainty during this low-liquidity environment. Weakness emerging might see the price dipping towards $600, where the lower line of the channel is located. A breach below the structure will be a bad sign for buyers since that could mean more selling could follow through.

XRPUSD (Kraken)

XRPUSD technical analysis

It was a bloodbath for XRP during the past week as news of an SEC charge for unregistered securities offering flooded the market. Market participants dumped the token aggressively, leading to losses of more than 50%. That’s a massive hit for the bullish sentiment and even if a bottoming formation will start to form, it could take some time.

The volatility seems rather calm right now, which is why we suspect the price is locked between two key areas highlighted on the chart. Sellers might resume on pullbacks towards the 40-44 cents area, while buyers might be active around 20-22 cents, where they capped the downside four days ago.

We can’t rule out a bounce, due to the oversold conditions, but also, it is possible to see more pain ahead, especially if the investigation will end with penalties and other sanctions. XRP dropped to the 4th place by market cap and that’s something weighing on the overall market sentiment. The last few days of the year should see volatility contracting, and things will get more active only early into the new year.


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