Bitcoin – Will it bounce or will it dive?
As the flagship cryptocurrency continues to play in ever-tighter ranges, the time for a major trend change is fast approaching.
Since its historic run up to $20,000 in late December-early January, Bitcoin has seen a consistent pattern of lower highs, and attempted lower lows. Looking at the daily time-frame, each attempted push upwards was characterised by a double-top – which is a significant reversal pattern.
January’s push lost momentum at the $17,200 mark. In early March, Bitcoin witnessed another double top, reversing its trend at the $10,000 region. August saw a similar double-top reversal, peaking at $8,540 before resuming its bearish continuation. Finally, the hours leading up to the September 5th bloodbath also ended in a double-top at $7,445 – all be it only visible on a smaller time frame.
However, the mother ship has consistently resisted any push below the $6,000 mark, leading many traders, investors and enthusiasts to believe that Bitcoin has “bottomed out” at this level.
During this bearish downtrend, which could be described as weekly or monthly consolidation, Bitcoin has been consistently increasing its market dominance – from its January lows at 32.2%, to last month’s highs at 57.94%. BTC stands at 52% market dominance at the time of writing. This means that traders view Bitcoin as a relative safe-have asset compared to other cryptocurrencies on the market.
Such figures are also confluent with intermittent uptrends or corrections in the market, where Bitcoin’s strength and stability lends itself to altcoins, resulting in free-flowing capital from the crypto “safe haven” to more recently launched coins – which tend to post major gains or losses relative to BTC.
Clearly, there’s pattern here. But with a tightening weekly range, it’s unlikely that the market will keep this bias up for long.
At the time of publishing, Bitcoin is exchanging hands at $6,600, following an upward channel starting on September 13th which was confirmed the following week on the 18th.
Decision-making time inches closer
From a technical perspective, Bitcoin is now trading in what could be called the eternal trading range denoted in the red and green support/resistance price-ranges below. The coin has shown a reluctance to post below $6,000, moving into a higher-low pattern since its attempted dump on June 28th.
Looking at the 4-hour chart, we can observe what looks like a rising wedge, and when we zoom out, we can also note a bearish flag.
At the same time, BTC refuses to drop below $6,000 and XRP has seen monumental gains in the last few days, arguably jump-starting a mini-mass rally in the process. These mixed signals can be taken both ways, but provided there is large volume on any breakout or breakdown beyond support and resistance levels, then the space will observe a significant trend change or continuation.
Fundamentals make waves
From a fundamental perspective, the reality is that not much has happened with regards to big technology announcements or adoption. Bitcoin’s network is in the process of implementing the second-layer Lightning Network protocol, which theoretically enables fast transactions between participating nodes. According to data from the Lightning Network Search and Analysis Engine, LN’s network capacity has increased 23% in the past 30 days.
In other news, BTC ETFs (Exchange Traded Funds) keep getting rejected or postponed. An official ETF approval by the US SEC (Securities and Exchange Commission) would most likely trigger another surge like the one seen in December 2017 – but this is an unlikely scenario considering the two frontrunners (VanEck and SolidX) got delayed for another 180 days.
Meanwhile, bullish traders, investors and “hodlers” have turned their attention to Bakkt, which is a global network exchange backed by Intercontinental Exchange’s financial infrastructure. This initiative could pave the way for more established financial institutions to publicly declare their support for all things crypto.
All things considered, as we move into the final quarter all eyes are on Bitcoin, Ripple and Ethereum.
Nothing said in this article will be construed as investment advice.