After trading sideways in the $9,500 range for a while now, Bitcoin is struggling to break above the significant $10,000 mark. This is despite a strong recovery following the catastrophic effects of COVID-19 on world markets earlier this year.
However, the crypto-assets inability to break above $10k is not entirely unexpected, and, in fact, it is surprising Bitcoin has done this well so far. Almost no other traditional stock or asset has recovered as well as Bitcoin and expecting a further push above $10k may be asking a bit much.
The surge of volume that BTC enjoyed following the drop to sub $4k in March has now dried up, leaving little to suggest further upward movement is coming. Bitcoin’s 24-hour volume has dropped significantly since the $218,000 levels that we saw around the May 11th halving. The last few days have seen a reduction to a little over $55,000 in volume per day.
Looking at previous rallies, we’ve typically seen relatively long periods of low-volume consolidation before any sudden upward surge. With the recent volatility caused by the 3rd halving event and the many global socio-political events happening now, it’s difficult to gauge what level of consolidation has actually occurred.
However, there are certainly some signs of a BTC bull market in the making. The relative strength index (RSI) of an asset is an excellent measure of where it’s headed and Bitcoin’s RSI is moving increasingly towards 60 – a strong bullish signal. In addition to this, both the long and short-term moving averages for Bitcoin are all still heavily in ‘buying’ territory.
On the bearish side, Bitcoin has formed a ‘triple top‘ by failing to break $10k three times in a row. This kind of formation is almost always followed by a retracement back to previous support levels. In this case, a mild retracement will see Bitcoin revisit the $8,200 level, with a stronger retracement taking it back to around $7,000.
Which way we go will depend heavily on whether we see fresh buying power enter the market next week. The general sentiment is still positive but without a strong push above $10,000, it’s unlikely that will hold. The current global financial situation could push capital towards BTC as a safe haven but could also result in people shying away from uncertain investments. The coming weeks will be telling.