Bitcoin is nearing the end of its consolidation phase and the resulting move will determine if altcoins continue to outperform BTC price in the short term.
This week Warren Buffett made waves throughout financial media as reports that Berkshire Hathaway sold several bank stocks and purchased shares in Barrick Gold were made public thanks to the company’s latest quarterly shareholder filing.
This purchase is significant because Buffet has been a strong critic of gold, however, in the current economic conditions, he appears to have changed his view and sought safety in the asset.
Bitcoin advocate Max Kaiser believes that several fund managers are now likely to increase their allocation to gold, which could boost its price to $5,000.
Kaiser also expects institutional money to flow into Bitcoin (BTC) resulting in a rally to $50,000.
Crypto market data daily view. Source: Coin360
Galaxy Digital CEO Mike Novogratz said that Bitcoin has cemented its position as a store of value over the past year.
Although he expects gold to move higher, Novogratz believes that Bitcoin is a better buy because it only has “a $220 billion market cap, where gold is over $10 trillion and so Bitcoin has a long way to go to catch gold in just adoption.”
Grayscale Investments CEO Barry Silbert said that their recent advertisements on various television networks bore fruit as the company has seen an inflow of $217 million into various Grayscale funds in a week.
Bitcoin continues to consolidate near the recent highs of $12,113.50, which shows that the bulls are not closing their positions as they anticipate the uptrend to extend further.
BTC/USD daily chart. Source: TradingView
The average directional index (ADX), a component of the directional movement indicator, remains strong above 38 and the 20-day exponential moving average ($11,357) is sloping up, which suggests that the uptrend is strong.
The BTC/USD pair has formed a pennant, which is a bullish pattern. If the buyers can propel the price above the pennant and the overhead resistance at $12,304.37, the uptrend is likely to resume.
This setup has a target objective of $14,956. However, the bears will try to stall the rally at $13,000 and again at $14,000.
Instead of the breakout, if the bears sink the pair below the pennant, a drop to $10,400 is likely. A break below this level will suggest a lack of buyers at higher levels and might signal a short-term top.
BTC/USD 4-hour chart. Source: TradingView
The positive directional indicator (+DI) and the negative directional indicator (-DI) are criss crossing and the ADX has dropped near to 18. This suggests a lack of direction on the 4-hour chart.
Currently, the price has turned down from the resistance line of the pennant, which suggests that the bears are aggressively defending this level. However, the bears have not been able to sustain the price below the 20-EMA, which suggests buying on dips.
A breakout of the resistance line of the pennant will signal that bulls are back in the driver’s seat. On the other hand, if the price sustains below the 20-EMA, a drop to the support line of the pennant is likely.
Ether (ETH) remains in a strong uptrend with the ADX trading above the 53 levels and the 20-day EMA ($382) rising up. The +DI remains well above the -DI, which suggests that the bulls have the upper hand.
ETH/USD daily chart. Source: TradingView
The ETH/USD pair has rebounded off the breakout level of $415.634, which shows strong buying by the bulls at this support. If the bulls can push the price above $444.15, a rally to $480 is likely.
Conversely, if the bears sink and sustain the price below $415.634, a drop to the 20-day EMA is possible. If the pair rebounds off this support, the bulls will again attempt to resume the uptrend.
However, if the bears sink the price below the 20-day EMA, then a drop to $366 is likely. A strong rebound off this level could keep the pair range-bound for a few days.
ETH/USD 4-hour chart. Source: TradingView
The bears had pushed the price below the 20-EMA on the 4-hour chart but they could not sustain the price below the $415.634 support, which suggests that the bulls are aggressively defending this support. If the bulls can now drive the price above $444.15 then the uptrend is likely to resume.
However, if the pair turns down from $444.15, then the price might consolidate in a tight range for a few days.
The ADX has corrected to below 23 levels, which suggests that the trend has weakened in the short-term. This also points to a possible consolidation in the near term. This view will be invalidated if the pair turns down and breaks below the $415.634 support.
The ADX on EOS is below the 20 level, which suggests that it is not in a strong trend yet. However, the sharp rally on Aug. 15 carried the price close to the critical overhead resistance at $3.8811.
EOS/USD daily chart. Source: TradingView
Currently, the bears are defending this resistance level but the bulls are attempting to push the price above it.
If the bulls can sustain the EOS/USD pair above the overhead resistance at $3.8811, the momentum is likely to pick up. The next target on the upside is $4.4 and then $4.66. If both these levels are scaled, the rally can extend to $5.40.
Contrary to this assumption, if the bears sink the price below $3.50, a drop to the 20-day EMA ($3.16) is possible.
EOS/USD 4-hour chart. Source: TradingView
The ADX on the 4-hour chart has risen to above 41 level, which suggests that the short-term trend is strong. The +DI is above the -DI and the 20-EMA is sloping up, which suggests that the bulls have the upper hand.
Currently, the price has rebounded off the 20-EMA, which suggests strong buying on dips to this support. The bulls will now try to sustain the price above the $3.8811 resistance. If successful, the uptrend is likely to pick up momentum.
This view will be invalidated if the price turns down from the current levels and breaks below the 20-EMA. Such a move will signal advantage to the bears.
Tezos (XTZ) broke above the overhead resistance of $3.96 on Aug. 10. Although the bears attempted to fake this breakout on Aug. 11 and 12, they could not sustain the lower levels, which suggests aggressive buying by the bulls on dips.
XTZ/USD daily chart. Source: TradingView
The ADX has risen to above 28 level, which suggests that the trend is gaining strength. If the XTZ/USD pair rebounds off the $3.96 levels, the bulls will try to resume the uptrend by pushing the price above $4.50. If successful, the pair can rally to $5.5.
Contrary to the assumption, if the bears sink the price below the critical support at $3.96, a drop to the 20-day EMA ($3.62) is possible. If the pair bounces off this support, the bulls will attempt to resume the up move.
This bullish view will be invalidated if the bears sink the pair below the 20-day EMA. Below this level, the decline can extend to $2.6.
XTZ/USD 4-hour chart. Source: TradingView
The 4-hour chart shows that the bulls have held the $3.96 support. If they can push the price above the downtrend line, a move to $4.50 is possible. However, if the bears defend this resistance, the pair could remain range-bound for a few days.
The flat 20-EMA and the sharp fall in the ADX suggests a balance between supply and demand. This view will be invalidated if the bears sink the price below the $3.96 support. If that happens, a fall to $3.60 and then to $3 is possible.
Cosmos (ATOM) broke above the overhead resistance of $5.423 on Aug. 12, which has pushed the ADX to above 30 levels. The +DI is above the -DI and the 20-day EMA ($4.97) is sloping up, suggesting an advantage to the bulls.
ATOM/USD daily chart. Source: TradingView
Currently, the ATOM/USD pair has recovered from the intraday lows, which suggests strong buying on dips.
If the bulls can push the price above $6.604, the uptrend is likely to resume. If an uptrend resumes only after a one to three day correction, it indicates strong momentum. The pair remains positive as long as it sustains above the breakout level of $5.423.
The bears will gain an upper hand if the pair drops below $5.423 and sinks below the 20-day EMA. Such a move will signal a lack of buyers at higher levels and could result in a deeper correction.
ATOM/USD 4-hour chart. Source: TradingView
The ADX on the 4-hour chart has dropped to below 25 levels, and the +DI and the -DI are close to each other, suggesting a balance between the bulls and the bears. The 20-EMA is also flattening out, which is another indication of a consolidation.
However, if the bulls can propel the price above the downtrend line, a move to $6.35 and then to $6.604 is possible. The uptrend is likely to resume on a close (UTC time) above 6.604.
Conversely, if the bears sink the price below the trendline, a drop to $5.423 is likely. A break below this support will turn the short-term trend in favor of the bears.
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