Not a day goes by without someone telling you something about Decentralized Finance (DeFi). It’s touted as bigger than the 2017 altcoin boom, and when you look at things like Tether’s monstrous market cap, Chainlink’s recent price hike and DeFi Celsius platform recently exceeded $ 1 billion in crypto deposits, it is clear that These are well-founded claims.
However, the only problem this potentially presents for Bitcoin is the value proposition for high net worth individuals and institutions considering entering the space.
Earn up to 8% interest in USDT in one year or risk losing 11% in Bitcoin in one day?
Daily performance of the crypto market. Source: Coin360.com
Bitcoin is trading at the top
BTC / USD 1-day chart. Source: TradingView
Using the 1-day BTC chart, it is clear that we are still in a dangerously descending pattern near the top of a channel. The current price is approximately $ 9,150 and the resistance is $ 9,270.
This places the mid-level support at $ 8,750 and the lower channel support at $ 8,200, suggesting to potential Bitcoin buyers that an 11% drop in channel support is a potential scenario.
I don’t know about you, but when faced with the possibility of losing 11% in one day, compared to earning 8% in one year on a DeFi platform, the risk versus the reward, especially for the institutions they manage Third-party portfolios, the latter certainly seems like the safest bet.
But what about the same view on the world’s number two currency by market cap, namely Ether? Your Ethereum blockchain houses many of these so-called DeFi projects that have been receiving a lot of attention lately.
The rise of the phoenix
ETH / USD 1-day chart. Source: TradingView
Comparatively, Ether (ETH) appears to be trading at the bottom of its current rising channel on the daily chart. In other words, paint an image of 50% up and 3% down.
While this is just a view, and by no means a guarantee of what will happen in the immediate future, it does indicate to me that Etheruem’s Ether token could be preparing its return.
Despite all the FUD and controversy, you can also read on Twitter about the delays of Ethereum 2.0 and one of its co-founders who wish to be disassociated with it. However, you cannot deny that Ethereum has established itself as as important as Bitcoin in the cryptocurrency space.
Without Ethereum, you wouldn’t have most DeFi platforms, smart contracts, or alternative currencies that could give you crazy returns if you pick the right one, including the Marines’ beloved Chainlink (LINK).
Fibonacci Weekly for Ether
ETH / USD 1-Week Chart Source: TradingView
In last week’s technical analysis, I looked at the fiber in Bitcoin. The price of Bitcoin has not changed much as it is still around 0.382 fib.
However, for Ether, all of the price action in its current channel occurs below 0.236, which would put ETH / USD close to $ 400 if it reaches the first Fibonacci level.
Also, that doesn’t even bring the price of Ether closer to Bitcoin’s current pullback levels. If ETH were to approach 0.382 fib, we are seeing a 150% gain in the second largest cryptocurrency in space.
The question then is, will Ethereum begin to outperform Bitcoin in the immediate future?
If so, what will happen to all the alt combined with ETH and the subsequent gains that people start taking in ETH pairs only? What effect would you expect to occur in space? It looks like it would be 2017 again and present an attractive third option for investors.
- DeFi Interest Growth
- Possible loss of 11% when buying Bitcoin
- 150% profit on the world computer that is Etheruem?
Bitcoin has long been touted as a safe haven asset and store of value. But DeFi presents alternative investment opportunities, and while perhaps a token like Chainlink could lead the next bull run, don’t forget that the paired assets are the ships that will surge with the tide, putting Ether in a prime position for a comeback.
The bullish scenario for Bitcoin
BTC / USD 1-hour chart. Source: TradingView
Looking at Bitcoin on the hourly chart, it is important for Bitcoin bulls to break above the $ 9,300 0.618 fib to break out of the current downturn. The price was turned down from $ 0.382 out of $ 9,200 in the past 24 hours, so right now all eyes are on this narrow range.
Once outside this range, breaking the current $ 9,500 fiber pattern would be key to once again seeing the $ 10,500 multi-year resistance being challenged again.
The bearish scenario for Bitcoin
I see a lot of support around $ 8,900 on the daily chart. From here, it begins to open $ 7,800 as the next potential Fibonacci target for support.
BTC / USD 1 daily chart. Source: TradingView
You may find support down the road in the channel between $ 8,750 and $ 8,350 before considering these targets lower.
BTC / USD 1 daily chart. Source: Tensorcharts
However, if $ 8,200 is lost, I expect a very quick drop to the $ 7K levels as there are no significant buy orders on the Binance order book heatmap below $ 8,500.
The views and opinions expressed here are solely those of @officiallykeith and do not necessarily reflect the views of Cointelegraph. Every investment and commercial movement involves risk. You must do your own research when making a decision.
