Bitcoin, Ether Price Surge May Not Last: Crypto Markets Analysis

Prices are higher on more volume, but a number of whales are moving bitcoin on to exchanges, which could foreshadow selling pressure.

AccessTimeIconOct 26, 2022 at 7:09 p.m. UTC
Updated Oct 26, 2022 at 7:27 p.m. UTC

Glenn C Williams Jr, CMT is a Crypto Markets Analyst with an initial background in traditional finance. His experience includes research and analysis of individual cryptocurrencies, defi protocols, and crypto-based funds. He owns BTC, ETH, UNI, DOT, MATIC, and AVAX

Bitcoin and ether spiked on Wednesday, their second consecutive day of significant gains.

The two largest cryptocurrencies by market capitalization recently rose 3.3% and 6.7% over the past 24 hours. On Tuesday, BTC crossed $20,000 for the first time since Oct. 5, while ETH topped $1,500 for the first time since the Sept. 15 Merge, the Ethereum blockchain’s technological overhaul.

Whether a new longer-range upturn is afoot or BTC and ETH prices are likely to revert to the mean is still unclear.

Technically, both BTC and ETH blew past traditional “overbought” metrics on their hourly charts, and have since retreated. The Relative Strength Index (RSI) shot past 90 for both BTC and ETH on their hourly charts.

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Bitcoin, Oct. 26, 2022 (TradingView)

As those levels fall well outside the range of normal hourly RSI movement, the RSI may cool, at least from an intraday perspective

Current daily RSI levels for BTC and ETH are both approximately 71. Traditionally, 70 is used as a benchmark for overbought conditions, so both are close to reaching those levels. Merely breaching a traditional level is not enough to determine if price movement is going to change direction, however. An “overbought” asset can remain that way for extended periods under the right conditions.

Volume will likely play a large role in determining whether Tuesday’s price move marked the beginning of a fourth-quarter push higher, or merely a short-term spike in volatility that will soon cool.

Wednesday’s volume gives early hints of the former as today’s price increases were met with higher activity. Should BTC continue to push higher, the price could elevate towards $21,400. For ETH, the upside appears to be just shy of $1,600.

Targets for mean reversion could be $19,400 and $1,300, in line with both of cryptocurrencies' 20-period moving averages.

Exchange net flow may also indicate market trends. While it’s uncertain whether investors are looking to sell into Tuesday’s rally, they appear positioned to do so if need be. BTC and other cryptos have been moving on to exchanges recently.

This is especially noticeable with bitcoin whales, those investors holding at least 1,000 BTC. Whales have been sending increasing amounts of BTC to exchanges for the last 11 days, which could signal potential selling pressure.

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Whale exchange netflow (Glassnode)

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Glenn C Williams Jr, CMT is a Crypto Markets Analyst with an initial background in traditional finance. His experience includes research and analysis of individual cryptocurrencies, defi protocols, and crypto-based funds. He owns BTC, ETH, UNI, DOT, MATIC, and AVAX

CoinDesk - Unknown

Glenn C Williams Jr, CMT is a Crypto Markets Analyst with an initial background in traditional finance. His experience includes research and analysis of individual cryptocurrencies, defi protocols, and crypto-based funds. He owns BTC, ETH, UNI, DOT, MATIC, and AVAX