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Bitcoin (BTC/USD), Ether (ETH/USD) Bounce Back from Sell-Off

Bitcoin (BTC/USD), Ether (ETH/USD) Bounce Back from Sell-Off

Tammy Da Costa, Analyst

BTC/USD, ETH/USD Price Analysis:

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The two dominant cryptocurrencies, Bitcoin and Ethereum, continue to lure both retailers and large corporations despite the recent pull-back in prices that resulted in BTC/USD and ETH/USD falling 26% and 36% respectively throughout the course of last week, invoking panic that the ‘bubble’ had burst.

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However, after six consecutive months of gains, it appears the retracement in prices from all-time highs may have been a mere price correction rather than a reversal in trend as bulls manage to take back control, driving short-term price action towards the upside, igniting the volatility regime that initially fueled the bullish reprisal of the ‘Bitcoin bubble’.

The adoption of major cryptocurrencies by key market players has contributed to the recent rally, with the likes of PayPal and Tesla attributing to the large upswings. Limited supply of the virtual currency has led some investors to believe Bitcoin and Ether possess ‘safe-haven’ appeal, competing with Gold and Silver as a hedge against inflation and US Dollar weakness.

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Bitcoin (BTC/USD) Technical Analysis

After reaching another all-time high on 21 February, the strong upward momentum that pushed prices above $58,000 faltered, resulting in a brief sell-off. Bitcoin prices then fell to key Fibonacci support at $45,463, formed by the 23.6% retracement level of the 2020 – 2021 move.

But, with the psychological level of $45,000 holding the bears at bay, bulls were able to bounce off of support. Price action then ran into a wall of resistance, formed by the 14.4% Fibonacci retracement level of the move mentioned above.

Meanwhile, the Commodity Channel index (CCI) remains within normal range, currently resting at a positive reading of 19.

Bitcoin (BTC/USD) Daily Chart

Chart prepared by Tammy Da Costa, IG

Ether (ETH/USD) Technical Analysis

Ethereum continues to follow in Bitcoin’s footsteps, with bulls driving price action to produce a series of fresh highs before plunging below the rising channel that guided price for some time. With the psychological level of $1,400 breaking the fall, bulls have gained control temporarily, pushing price above $1,600. The question remains, however, if bullish enthusiasm will be strong enough to allow for continuation higher or will this level give rise to a reversal?

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Ethereum (ETH/USD) Daily Chart

Chart prepared by Tammy Da Costa, IG

--- Written by Tammy Da Costa, Market Writer for DailyFX.com

Contact and follow Tammy on Twitter: @Tams707

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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