Bitcoin’s Volatility and Potential Breakout
The leading cryptocurrency, Bitcoin, has experienced a surge in volatility this week. The price of Bitcoin has faced resistance at the $69,000-$70,000 level, leading to two reversals from this barrier. These reversals indicate that sellers are actively defending the psychological level of $70,000.
Despite this resistance, there is an opportunity for buyers as the Bitcoin price has seen a 1.34% intraday gain. This could potentially lead to another breakout and pave the way for a prolonged recovery trend.
Is the $70,000 Threshold Set to Break?
When analyzing the Bitcoin price movements on the daily chart, technicians have identified a bullish pattern known as a “rounding bottom.” This pattern signifies a shift from a bearish to a bullish trend and is characterized by a gradual and rounded rise in price that resembles the shape of a “U.”
Currently trading at $69,371, the price of Bitcoin teases a bullish breakout from the pattern’s neckline resistance at the $69,000-$70,000 range. If there is a successful breakout above this barrier, it would provide a better signal for Bitcoin’s sustainability at new heights.
If this pattern holds true, it suggests that buyers could potentially push the price of Bitcoin to reach a target of $124,000.
However, if the overhead supply at $70,000 triggers a correction, there is support available for coin holders at $63,240 and $57,500. These levels would help regain bullish momentum. Even with a potential pullback, the overall bullish outlook remains intact as the price may develop into a cup-and-handle pattern.
Bitcoin’s Shrinking Exchange Supply Signals Bullish Market Sentiment
An interesting trend in the Bitcoin market is highlighted by a tweet from crypto trader Ivan Tokenomija, which was shared by the crypto analytics firm Santiment. The chart presented in the tweet shows a declining balance of Bitcoin on exchanges, indicating reduced selling pressure. This decline in exchange supply suggests that investors are moving their BTC to private wallets, typically for long-term holding.
This behavior of holding Bitcoin is seen as a bullish sign. It implies a potential price increase due to the economic principle of scarcity. When supply is reduced and demand remains constant or increases, the price tends to go up.
Technical Indicator
- Pivot Levels: As Bitcoin enters price discovery mode, buyers may encounter overhead supply at $77,635 and $91,400. These levels align with the R2 and R3 of traditional pivot levels.
- Average Directional Index (ADX): The ADX slope at 50% reflects an overextended rally. A minor pullback may be needed to regain bullish strength.
Overall, these technical indicators suggest that Bitcoin’s price has the potential to break through the $70,000 threshold and continue its upward trend. The declining exchange supply of Bitcoin further supports a bullish market sentiment.
Hot Take: What Lies Ahead for Bitcoin?
The recent volatility in Bitcoin’s price and its potential breakout above the $70,000 level have left many wondering what lies ahead for the leading cryptocurrency. Here are some key points to consider:
Rounding Bottom Pattern:
The emergence of a rounding bottom pattern on the daily chart indicates a shift from a bearish to a bullish trend. This pattern suggests that the price of Bitcoin could continue to rise in a rounded manner, potentially reaching new heights.
Support Levels:
If there is a correction from the overhead supply at $70,000, there are support levels at $63,240 and $57,500. These levels could help regain bullish momentum and keep the overall positive outlook intact.
Declining Exchange Supply:
The decreasing balance of Bitcoin on exchanges indicates reduced selling pressure. This behavior of moving BTC to private wallets for long-term holding is seen as a bullish sign, suggesting a potential price increase due to scarcity.
Technical Indicators:
- Pivot Levels: Buyers may encounter overhead supply at $77,635 and $91,400, which align with traditional pivot levels.
- Average Directional Index (ADX): The ADX slope at 50% reflects an overextended rally. A minor pullback may be needed to regain bullish strength.
Considering these factors, it is possible that Bitcoin’s price could break through the $70,000 threshold and continue its upward trajectory. However, as with any investment, it is important to stay informed and monitor the market closely.
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