20 December 2020
It has been a fantastic week for Bitcoin and crypto enthusiasts as the world’s largest cryptocurrency rallied all the way to hit its new all-time high above $23,500. However, BTC's price has started to consolidate and many investors are looking at growth opportunities. Will ERC tokens be the beneficiary, or will XRP go up in 2020?
On Friday, December 18, Bitcoin (BTC) has been mostly trading sideways and facing a few rejections above $23,000 levels. Although at the press time, Bitcoin is trading at $23,152, some of the traders suggest that there’s a high selling pressure above $23K and Bitcoin (BTC) has formed a local top that could consolidate for sometime while not expecting any further price discovery until 2021.
Bitcoin RSI (Relative Strength Index) Hints It's Overbought
While the excitement has driven investment in Bitcoin, there is an important indicator to monitor to understand if a correction is around the corner: relative strength index (RSI). Any score on the index above 70 can hint that a digital asset is overbought and the reversal price trend can occur. The RSI of Bitcoin is well above this benchmark.
Speaking at CNBC’s Trading Nation, Miller Tabak chief market strategist Matt Maley:
“It’s above 88 [as of Thursday]. That’s not quite up to the 90 level that it reached twice in 2017, but those were followed by declines of 36% and 64%. There’s no question it’s been a melt-up, and it could last a little bit longer. I think on a short-term basis it could continue a little bit longer, and I’m very bullish on it on a very long-term basis. But intermediate term, I’m a lot more concerned than I think a lot of other people.”
Complementing the increase of RSI of Bitcoin, investors can look at the number of pending transactions - known as "mempools" - on the Bitcoin blockchain that have yet to be confirmed. As the number of unconfirmed transactions increases, the transactions costs on Bitcoin's blockchain increases and decreases profitability of Bitcoin.[caption id="attachment_9170" align="alignnone" width="1654"] Source: Blockchain.com[/caption]
Act II: Time to Shine for Ethereum and ERC Tokens (LINK, ZIL, CVC, PAY)
With an inverse Bitcoin price relationship, there are several ERC tokens that have had triple digit growth in 2020 that are gaining significant investor and developer interest heading into 2021: Zilliqa (ZIL), Chainlink (LINK), Civic (CVC), and TenX (PAY). Many investors are looking towards these four projects, which are small to mid cap cryptocurrencies, as major growth opportunities in their portfolio given the disruptive nature of their technology and potential commercial applications.The foundational blockchain for these ERC tokens is Ethereum, whose native currency ETH has seen much of its supply starting to dry up on the crypto exchanges during the latest Bitcoin bull run.