Bitcoin wrapped up an exceptionally strong 2024 (up 120% YoY) with a whimper, recording the first overbought “sell” signal on its weekly bar chart since mid-April according to the stochastic oscillator, which is an indicator of trend exhaustion. The signal suggests that bitcoin will remain within the range, at least in the short term (about 2-6 weeks), while other risky assets (such as stocks) continue to pull back.
Important technical levels to watch out for for bitcoin:
The minor resistance is at the most recent high, around $108,000, above which lies “uncharted” territory. A breakout would be a bullish development, but the momentum does not seem strong enough at this point to generate a breakout.
Initial support is near $84.5K, defined by the Ichimoku cloud model, a trend-following model based on historical prices. The recent deterioration in our medium-term indicators increases the likelihood that a pullback will deepen further, with secondary support around $73.8K, reinforced by the rising 200-day (~40-week) moving average.
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Despite short- and medium-term bearish signals, the long-term outlook for Bitcoin remains bullish from a technical perspective following the post-November election breakout. The break to new highs marked the emergence from a multi-month downtrend channel, and it helped long-term momentum indicators such as the monthly moving average convergence/divergence (MACD) reaccelerate. So a correction for bitcoin in the first quarter should provide an opportunity to add exposure ahead of another surge in bitcoin later in 2025.
Ethereum: Resistance near $4,000 is a hurdle for early 2025
Like bitcoin, ether has issued an overbought “sell” signal, which comes after a rejection at a key resistance around $4,000. The ‘sell’ signal has medium-term implications and supports a correction phase in the next few months. Ether also has initial support at the daily Ichimoku cloud model, near $3226, above which it has stabilized. We expect that a correction in the first quarter will lead to an analysis and test of the 200-day (40-week) moving average. However, our long-term indicators are still pointing higher, albeit less convincingly, compared to bitcoin. A break above the $4000 level would likely result in improved long-term metrics such as the monthly MACD.
Bitcoin vs. Ether: Bitcoin Outperformance in 2024 Gives Way to Volatility
In 2024, bitcoin outperformed ether by 74%, a trend that is clearly visible in the bitcoin/ether ratio. Since early November, the relative performance between the two largest cryptocurrencies has become more erratic, evidenced by the wide trading range that has taken hold of the ratio.
