Bitcoin Price Must Now Break $8.2K to End 6-Month Losing Streak
Bitcoin price needs to break above $8.2K to spark a new bull market while altcoins continue to rally higher due to the low volatility in BTC price.
While Bitcoin (BTC) is in a range between $6,800-$8,200, some altcoins have shown impressive movements during the past week. Some examples are MATIC (+83%) and RVN (+46%). These movements generally occur during low volatility periods in Bitcoin.
Crypto market daily performance. Source: Coin360
Now that Bitcoin is attempting to rally above $7,600, into its previous trading range, new analysis and perspectives are needed in order to see if the market can provide continued upside movement for altcoins.
Bitcoin stuck in a bearish range
Bitcoin’s trend still favors the downside as is shown in the 12-hour chart below.
BTC USD 12-hour chart. Source: TradingView
The trend is still down where lower highs and lower lows are created. However, the price temporarily found a bottom at $6,500-$6,800. Since that bottom formation, a range is defined between $6,800 and $7,800, in which the $7,800 area is the upper resistance zone.
Another indicator providing range-bound confirmations is the decrease of volume within such a range. During the dropdown from $8,400 to $6,500 the price started to accelerate, which caused the volume to increase. However, the moment the price is inside a range, volume usually decreases and goes away. The consequence is that the weird “Bart Simpson” pattern happens and liquidation hunts occur.
Why? The volume is overall lower, which also means that order books are thin. This results in more effortless stop hunt movements as the required volume to execute such a move is much lower.
Support spotted on the 4-hour chart
BTC USD 4-hour chart. Source: TradingView
The 4-hour chart is showing the same range levels. The price couldn’t clear the $7,800 resistance, through which the price retraced towards the green area around $7,000 for a support test.
This confirmed support (including bullish divergences on smaller time frames), and the price moved back up towards the upper parts of the range in the $7,800 area.
The $7,400 level is most important for now as this is a healthy horizontal level where the price needs to hold to justify a continued trend upwards.
Falling wedge bottom construction
BTC USD 2-hour chart. Source: TradingView
The 2-hour chart shows a falling wedge construction, which led to the breakout to $7,800. However, the same day the price retraced back towards the previous support area in which the green zone once again confirmed the support area.
Then, a natural slow gain towards the $7,400 area occurred, and now the price finally broke through this level upwards (as is recognized by the arrow).
Total market cap stuck in falling wedge structure
Total market capitalization chart. Source: TradingView
The total market capitalization is showing a similar structure as Bitcoin. However, it’s more of a falling wedge structure rather than a downwards trending channel (even though the two don’t have many distinguishing characteristics).
In this regard, the purple area is still holding as support while the resistance defines the upper range at $213 billion.
Is the pattern repeating again?
Total market capitalization chart. Source: TradingView
The recent movements of the cryptocurrency market are showing similarities with the movements that took place throughout October. Through that, an upwards push is quite likely to occur towards the $215-217 billion zones (similar to the movements in October).
If this occurs, market liquidity is taken to the upside, which would make the market bullish overall. If the price is once again rejected at that resistance area, it’s likely that a retest of the purple area is needed. Through that the price is able to get the liquidity from the downside and create bullish divergences, generally marking a bottom formation.
Would that be bad?
Not at all!
Remember that the price came from $3,100 earlier this year and is currently testing at which level support can be found (and a potential higher low). If the price and total market capitalization can do that here, market performance in 2020 could be astounding. The question is, what is needed for bullish perspectives over the short term?
BTC USD bullish scenario. Source: TradingView
Still, several scenarios can qualify for a bullish scenario. The short term vision is quite strict in which the $7,400 area plays an important role. The green area around $7,400 needs to be maintained as support in this scenario. If that’s the case, continuation towards the $7,800 resistance and the main upper resistance zone at $8,200 is likely to occur.
However, flipping towards a bigger horizon, the price needs to clear that $8,200 area to confirm a trend shift. Why? Well, through that push, the price will be able to break the downtrend and start a potential upward trend.
BTC USD bearish scenario. Source: TradingView
The bearish scenario needs a bit more explanation. Either way, a test of $7,800 could occur through which a hard rejection (preferably a wick and instant dropdown) needs to occur. This is most likely to be followed by a drop below $7,400.
However, on the other hand, if $7,400 doesn’t provide the required support, this bearish outlook could play out as well.
Would one expect to see the lower area to hold support then? To be honest, it seems unlikely but traders will be watching closely to see further downside in which the $6,800 region becomes interesting. It might even be possible to clear the liquidity below the lows before the price can surge to $8,000.
it is clear that Bitcoin’s volatility is decreasing and could remain low for a couple of weeks. The range is defined by the $6,800 to $8,000 area where Bitcoin price could be hover for a few weeks before it tests the downward trendline.
What does that mean for price action within the altcoin market? Possibly, altcoins will have more space to make their moves and these range-bound plays are quite attractive for leverage traders.
Don’t get stressed out by minimal movements of Bitcoin inside a tightening range — focus on the longer timeframe.
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.
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