In the past week, the cryptocurrency market has been consolidating after a moderate pullback earlier this month. While Bitcoin (BTC) and Ethereum (ETH) have remained unchanged, smaller coins in the market have experienced worse performance. However, pullbacks like these are considered healthy for the market, and there are potential profit opportunities as many coins pull back into strong support zones. In the next few minutes, we will discuss the current state of Bitcoin and Ethereum, their historical performance, and what to expect in the coming months.
Bitcoin’s Performance and Potential Support Zones:
Bitcoin has always been the most important coin in the cryptocurrency market, representing over 53% of the entire crypto market. It reached new record highs earlier this year, indicating the beginning of a new bull market in cryptocurrency. However, after a strong start, Bitcoin has cooled off and experienced a pullback. Last week, it dropped to as low as $59,000 from the lower $70,000.
Historical data shows that Bitcoin often experiences short-term volatility after reaching new highs. In 2020, it lost 10% shortly after reaching new highs, and in 2017, it lost over 30%. If Bitcoin breaks below its recent consolidation zone in the $60,000, strong support is expected in the mid- to lower $50,000. This zone is where Bitcoin started its rally at the beginning of the year and where its longer-term 200-day moving average (MA) stands, acting as strong support. Additionally, Bitcoin needs to recapture its 50-day MA for significant moves to the upside.
Despite the pullback, Bitcoin is still up by 50% for the year, making it the best-performing major asset in 2021. With the “halving” event already passed, the next few months could be a quiet period before a major move higher in the second half of the year. Even in the worst case of a significant pullback, it is likely to be the last opportunity before a huge rally in Bitcoin and the rest of the market.
Ethereum’s Performance and Potential for Outperformance:
Ethereum is the second-largest coin after Bitcoin, representing about 16% of the market. Its performance over the past week has been in line with Bitcoin, remaining unchanged. However, it has slightly underperformed Bitcoin this year, gaining only 37% compared to Bitcoin’s 50%.
Based on previous cycles, once momentum to the upside restarts on Bitcoin later this year, Ethereum is expected to majorly outperform. This current pullback could be its last one before reaching new all-time highs. Therefore, it will be important to closely watch Ethereum in the coming months for clues on what’s to come in the cryptocurrency market.
Conclusion:
The cryptocurrency market has been consolidating after a pullback, with Bitcoin and Ethereum holding steady. While smaller coins have experienced worse performance, pullbacks like these are healthy for the market. Bitcoin’s historical data suggests more short-term volatility can be expected, but strong support is anticipated in the mid- to lower $50,000. Ethereum, on the other hand, is expected to outperform once momentum to the upside restarts on Bitcoin. Overall, the next few months could be a quiet period before a major move higher in the second half of the year, making it an important time to closely monitor the cryptocurrency market.
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