Top Analyst Updates Outlook on Bitcoin and Ethereum, Says BTC Needs To Break Above This Price To Surge Higher

Popular crypto analyst Justin Bennett is updating his outlook on the two largest crypto assets by market cap.

Starting with Bitcoin (BTC), Bennett says that the flagship cryptocurrency could surge by up to 40% if it manages to break above the $42,000 resistance level.

“This area between $35,000 and $36,000 is support and $40,000 to $42,000 is resistance. Now as I have said recently, the market would have to get above $42,000 to expose $45,000 to $46,000, followed by that $50,000 to $53,000 resistance area.”

With Bitcoin now threatening to breach resistance at $42,000, Bennett believes that a strong relief rally is on the horizon for BTC.

“I continue to like the idea guys of a significant bounce here over the coming weeks. It’s taken longer than I thought it would, but sometimes that’s the way it goes.”

Bitcoin is trading at $41,490 at time of writing.

Next up is Ethereum (ETH). The crypto analyst says that Ethereum is trading sideways as he offers two likely possibilities.

“If we were to see Ethereum close back below this level here [$2,500] where it’s testing today, then $2,200 would be next…

If we were to see Bitcoin take out $35,000 support and go down to test $30,000, then Ethereum could come down and test $2,000…

Now on the flip side if we see a close above this area up here, right around $2,900, then $3,100 to $3,200 would be next.”

Ethereum is trading at $2,996 at time of writing.

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This bullish Ethereum options trade targets $3.1K ETH price with zero liquidation risk

Ether price (ETH) spent the last two months stuck in a rut and even the most bullish trader will admit that the possibility of trading above $4,400 in the next couple of months is dim. 

Of course, cryptocurrency traders are notoriously optimistic and it is not unusual for them to expect another $4,870 all-time high, but this seems like an unrealistic outcome.

Despite the current bearish trend, there are still reasons to be moderately bullish for the next couple of months and using a “long condor with call options” strategy might yield a positive outcome.

Options strategies allows the investor to set upside limits

Options markets provide more flexibility to develop custom strategies and there are two instruments available. The call option gives the buyer upside price protection, and the protective put option does the opposite. Traders can also sell the derivatives to create unlimited negative exposure, similar to a futures contract.

Ether options strategy returns. Source: Deribit Position Builder

This long condor strategy has been set for the March 25 expiry and uses a slightly bullish range. The same structure can also be applied for bearish expectations, but this scenario assumes that most traders are looking for upside.

Ether was trading at $2,677 when the pricing took place, but a similar result can be achieved starting from any price level.

The first trade requires buying 5.14 ETH worth of $3,000 call options to create a positive exposure above this price level. Then, to limit gains above $3,500 the trader needs to sell 4.4 ETH contracts of the $3,500 call.

To complete the strategy, the trader needs to sell 6.65 ETH contracts of the $4,000 call, limiting the gains above such a price level. Lastly, a $4,500 upside protection call for 5.91 ETH is needed to limit the losses if Ether unexpectedly skyrockets.

The strategy aims for a healthy 3.2 to 1 profit to loss ratio

The strategy might sound complicated to execute, but the margin required is only 0.175 ETH, which is also the max loss. The potential net profit happens if Ether trades between $3,100 (up 15%) and $4,370 (up 63%).

Traders should remember that it is also possible to close the position ahead of the March 25 expiry. In this strategy, the maximum gain occurs between $3,500 and $4,000 at 0.56 Ether, which is more than three times higher than the potential loss.

Unlike futures trading, this strategy gives the holder peace of mind because there is no liquidation risk. It is also worth noting that most derivatives exchanges accept orders as low as 0.10 ETH contracts, meaning a trader could build the same strategy using a smaller amount.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.