Bitcoin in consolidation before the next move – what will happen next?

Bitcoin in consolidation before the next move - what could happen

The behavior of the Bitcoin price heralds the next move. Let’s answer the question of what to expect from the price action of the king of cryptocurrencies and whether BTC is already in an area where a reversal of the ongoing trend will occur.

Two key formations

The Bitcoin price chart is taking on a very interesting structure. We can observe two, independent formations on it. The first, which is a macro object, is a descending pennant, already forming since the day Bitcoin established its ATH (November 10, 2021). The second formation, on the other hand, is a symmetrical triangle, which is successively narrowing the scope of its movement. It is the presence of the triangle that suggests to us there may be significant movements.

Many analysts suggest that Bitcoin has already reached the bottom of its valuation. It is worth remembering, however, that the triangle formation is not a signal for a potential reversal of the trend, but rather for its continuation. It is further reinforced by the bearish RSI divergence. Although it is not in the overbought zone, it has the right to have enough strength to push Bitcoin downward. The area of local overboughtness, in turn, begins to reach the stochastic RSI, which can also become a negative signal for the price.

Under such circumstances, when predicting the range of price movement, it is important to pay attention to the pennant formation. Its lower limit, at the time of writing this analysis, is at the level of $15,650, and it is falling by nearly $100 with each passing day. It is in this area that a rebound is likely to occur. On the other hand, a possible upward move would be a potential attack on the 200-week moving average (blue line), which is currently settling around $22,600.

The dollar index (DXY) sets new peaks

When analyzing Bitcoin’s situation, it is important to pay attention to the behavior of traditional markets, as well as the condition of the US dollar. With the former, BTC shows a close correlation, while in relation to the latter it behaves in opposite ways. While Bitcoin is currently occupying fairly low price levels, the DXY is breaking out of areas not seen since late 2002. Meanwhile, a very clear bearish divergence appears on the weekly chart. It suggests that the dollar’s buying power is beginning to weaken, making it likely that the index will decline in the near term. This is a very positive signal for Bitcoin, possibly triggering short-term increases. 

Cryptocurrency market capitalization defends an important area

Looking at the chart of the capitalization of the entire cryptocurrency market, we can see that the historically important level of $800 billion, is still met. At the same time, on the weekly interval, we see a significant overshoot of the TD Sequential indicator, as well as a turning histogram of the MACD indicator. This is quite significant, and a bullish signal for the market. A possible continuation of declines could lead to support in the $600 billion area. Increases, on the other hand, should represent an attack on 1 trillion.

The condition of the U.S. economy an indicator of movement

It seems that the charts are currently sending mixed signals. Maintaining such a situation for an extended period of time is, paradoxically, a good sign. Market indecision, while capitulating to many of its participants, has often resulted in reaching a bottom and changing the direction of the prevailing trend. At the same time, it is worth watching the condition of the global economy, with particular attention to the situation in the United States. Potential easing of monetary policy, or possible signals of an impending recession, can have a major impact on the valuation of the cryptocurrency market.

Picture of Łukasz

Łukasz

Market Analyst

Disclaimer: Blockbulletin does not take accountability of investments based on the information of the website. We highly advice readers to make extensive research prior to any invest

Share this article

More analyses

All articles loaded
No more articles to load

More news

XRP

XRP outperforms Bitcoin and Ethereum

In the past week, XRP decisively outperformed its main rivals, Bitcoin (BTC) and Ethereum (ETH), in terms of capital flows. Moreover, it recorded an impressive $2.7 million…

Solana and Avalanche on the eye of investment funds

Two alternative coins, Solana (SOL) and Avalanche (AVAX), are gaining increasing interest and are successively attracting the attention of investment funds. Although bitcoin (BTC) remains the main…
All articles loaded
No more articles to load

Learn more

Cryptocurrency wallets

Cryptocurrency wallets

We talked about security when trading crypto assets in an article titled “Online security“. We also mentioned how important it…
hardware wallets

Cryptocurrency hardware wallets

From the article titled “Cryptocurrency wallets” you learned about the different types of wallets. They were briefly characterized there. Let’s…
Where to buy cryptocurrency brokers

Which cryptocurrency Brokers to use

In the article “Where to Buy Cryptocurrencies (Exchanges)“, we introduced you to which exchange platforms you can purchase cryptocurrencies on.…
Trading cryptocurrencies

Trading cryptocurrency

In the cryptocurrency market, you face many opportunities to invest in cryptocurrency or buy or sell cryptocurrency. If you want…
All articles loaded
No more articles to load

Latest news

All articles loaded
No more articles to load