Since the beginning of this year, the price action on the Bitcoin chart seems to be quite boring. However, extended periods of consolidation, as a rule, have been a signal of further dynamic movements. Will it be the same this time?
Decision time is coming
The question on everyone’s mind lately is which direction Bitcoin will move. The excess of conflicting signals is creating uncertainty. When we look at the chart, we can see that since BTC reached its ATH on November 10, the trend it is in is strongly downward. The current consolidation fits perfectly into a symmetrical triangle (indicated by the white lines). Theoretically, such formations suggest later further movement, in the direction already taken. This could mean further declines. Yet different signals are shown by the volume indicator. We can see that the days when the price bounced from low levels exceed with their strength, the volumes of the following days, which are falling. This pattern often heralds a trend reversal. However, there are problems here. We should remember the difficulties that bitcoin faces at the $40,000 levels and above, as well as the moving averages mentioned in previous analyses, which are constantly being rejected or acting as resistance.
This is also shown by the Bollinger Bands and the 20-day moving average contained within them. Currently, the Bitcoin price is struggling to break it. So far, every upward breakout has pushed Bitcoin down again in the following days. This is a signal indicating the strength of the bears.
Total market capitalization of cryptocurrencies
Since our last analysis, there hasn’t been much change on the total market capitalization chart either. We observe the market attempting to break out of the descending channel. The 0.786 Fibo level is still support and the 0.618 Fibo level is resistance. Thus, the market movement range has narrowed considerably. The first signs of the market’s willingness to leave the mentioned formation are also shown, however this may not necessarily be a breakout, but perhaps a transition into a state of extended consolidation.
The chart of the altcoin market capitalization (including Ethereum) plays out no differently. Here, too, we observe a clear downtrend inscribed in the channel. What is interesting is the frequency with which the market hits its upper limit. On the one hand, it is a strong resistance, but the multitude of contact points suggests a potential breakout. The 0.618 Fibo level is also present there. It was already a barrier before. Meanwhile, now, its convergence with the channel may cause that breaking out of the resistance will require more patience from investors.
The chart of Bitcoin’s market dominance is one of the most interesting to look at in recent times. There are many indications that the nearly year-long consolidation period may be coming to an end. Bitcoin has found itself at the upper boundary of a descending triangle and is showing a willingness to break out towards the top. This is confirmed by the time it spends at it, as well as the Stochastic RSI, suggesting oversold conditions. An upward breakout of the triangle will most likely trigger a temporary Bitcoin season. In turn, a drop to the 40% dominance level will extend the consolidation, while triggering a minimum of a few days where altcoins could show more strength.
The above chart almost unanimously indicates that the time of narrowing price action on the charts could be the silence before the storm. Signals remain contradictory, so the direction of movement could come as a surprise. Global factors like positive or negative news are therefore worth keeping an eye on!