The price of Bitcoin (BTC), the leading cryptographic currency by market capitalization, has been between $8,600 and $10,500 since the halving. During the two months of sideways trading, the market began to warm up and altcoins began to appear.
In addition, traders and investors are constantly debating whether the price of the BTC is still in bullish or bearish territory. Let’s take a closer look at the charts to see where Bitcoin could be headed next.
Daily performance of the cryptography market. Source: Coin360
Bitcoin must maintain support above the crucial level of $8,600
The price of bitcoin has a critical level to keep above the $8,550-8,750 zone.
Table CTB/USD 1 day. Source: TradingView
Bitcoin has experienced a significant uptrend since the heavy crash in March. Since an uptrend is classified by higher highs and lows, the recent low is in the $8,550-8,750 range.
This is an important area as traders use these pivots for the placement of stop/loss levels. But as the price of Bitcoin has slowly retraced and consolidated, the focus should be on volume.
During the consolidation period, the volume has steadily decreased. This is an indication that we are not in the “movement”, which would mean a new trend. This movement would be confirmed by a strong break above $10,500 or a strong break below $8,500.
We see an example of this in the consolidation period of about $3,500-4,000 eighteen months ago.
A big movement is on the horizon
During the first quarter 2019, the price of bitcoin moved in a narrow range.
1-day CTB/USD chart. Source: TradingView
This is important because it shows what usually happens during a long lateral period and why the current stage is also classified as such.
During the 2019 period, the volume has been depleted over time. The volume peaked at the time of the burst, meaning that the burst traders reached their buy limit and short sellers reached their stop/loss.
This chain reaction triggered a sudden $1,000 candle. Since the price has been hovering in the range for months, the collapse is usually large and explosive. The more an object is in a certain range during a period of accumulation, the greater the movement once it has burst.
This particular example can be observed with many altcoins, as some of them have oscillated within an accumulation range. The Zilliqa (ZIL) is an example of this: it exceeded this range and has since risen by 1000 %.
Crucial levels over shorter periods of time for Bitcoin
Crucial levels over shorter time frames are essentially support at $8,800-9,000 and resistance at $9,300. The latter is more important because a breakthrough at the $9,300 level would signal a further rise in
BTC/USD 4-hour chart. Source: TradingView
The 4-hour chart shows a clear range structure. Support is in the $8,900 to $9,000 range, which should hold for bulls. As long as this support remains valid, a new test of the resistance zone is planned.
In general, the more a level is tested, the weaker it gets. Therefore, a new strength test at the $9,300 level could result in a significant break as it would put Bitcoin back within the previous range.
In other words, the chances of a further drop are reduced if $9,300 is recovered.
The total market cap maintains support above 100 days and 200 days MA
Graph of the total market capitalization of the Cryptocrown over 1 day. Source: TradingView
The total market capitalization of the cryptocurrency market also maintains the previous low level.
More importantly, the total market capitalization of the cryptocurrency market remains above the 100-day and 200-day moving averages (MA). As long as they remain above the 100-day and 200-day moving averages, the market capitalization is in bullish territory.
This is because it is an important indicator of the bullish/declining dynamics. The 100-day and 200-day MAs were used as a support throughout the previous cycle of the cryptocurrency market.
With these levels likely to hold as support, a break above $260 billion becomes increasingly likely. Returning to this $260 billion level would also help to fuel a new momentum towards new highs.
The bull scenario for Bitcoin
Graph of the BTC/USD bullish scenario over 4 hours. Source: TradingView
There are a few crucial points in the bullish scenario. First, the $8,900-9,000 support must hold. If this support is lost, the BTC/USD will likely fall below $8,550-8,750 in bear territory.
Second, the key $9,300 resistance must break for a potential rally around $9,650. As this level is untested, it would be the first pivot point for a more significant rally. This previous $9,300 resistance must turn around to support an upward movement.
However, as long as the price of Bitcoin remains below $10,500, the volume of movement is expected to be small. A big breakthrough would occur if the $10,000 to $10,500 resistance zone was finally conquered as many triggers would be affected.
It would not be surprising to see a rapid rise in a few hours to the next large $11,600 resistance zone.
The Bearish Scenario for Bitcoin
Graph of the BTC/USD bearish scenario over 4 hours. Source: TradingView
The bearish scenario is also very dependent on the $9,300 level. If this level is rejected again, one must expect a new test of support at $8,800-8,900 and the lower this support, the greater the chances of a decline.
At a strength level of $9,300, a retest of $8,800-8,900 would likely result in a further decline. Below $8,600, the volume could also drop sharply, as this would mean that the range of the last two months would be lost.
If the price of Bitcoin drops below $8,600, I expect a rapid drop to $7,400-7,700 without much opportunity for short films. Maintaining current support levels and 1 day support would mean that the market is still in great shape.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading movement involves risk. You must do your own research when making a decision.