Bitcoin is holding the formation and remains in a long-term broad consolidation. However, in recent days, the leading cryptocurrency is clearly weakening, rubbing against the lower border of the upward channel. Because of this, the altcoin market is suffering. So, let’s determine where the critical levels for BTC to hold are located.
On January 13, bitcoin began to form a rising channel, which has been functioning until today. We observe in it a successive movement of the price between the limits set by the formation (white lines). Currently, the value of BTC is testing the lower ends of the indicated pattern. While volumes remain at low levels, inside the channel we can see the descending cone formed since mid-April (yellow lines). In the current situation, it is definitely a bullish sign, suggesting a potential rebound. It is supported by the RSI indicator, which shows a clear divergence. What is interesting is the behavior of the MACD. We can see on it repeated and unsuccessful attempts to bullishly cross. The last time a similar situation with a similar duration occurred in the summer time of 2020. At that time, bitcoin was in consolidation after the bounce after the famous March crash, as well as after the halving. It was also the time before the bull rally.
Bitcoin’s limits of endurance
Many analysts have been asking themselves where the price of Bitcoin can go to ensure that sentiment still remains relatively bullish, while providing hope for further gains. As it turns out, there are several answers to this question.
The bottom border of the uptrending channel discussed in the previous paragraph is one of the important deviations for the price, but not the most important. When we zoom out on the chart, we can see that bitcoin is in an even wider channel. It is marked here with yellow lines. The price of BTC has repeatedly experienced contact with the lower of these lines, as well as a subsequent upward bounce. This is a level that should definitely be watched. It is currently oscillating around $35,000 and is steadily rising.
However, the so-called stop loss hunting of those who created sell orders at levels below the macro channel is not excluded. Then a descent to the lows of June 2021 is still possible. If we observe the candle wick drawn below $30,000 on the chart, we can still remain calm. However, if the price closes in these areas and holds in the following days, it could be a confirmation of a possible bear market.
Cryptocurrency market capitalization
A relatively rare phenomenon is the failure to successfully play the divergence. However, we experienced a similar situation on the total cryptocurrency market capitalization chart. Currently, it is difficult to see any anomalies. The total market capitalization is testing the level from which it broke out by crossing the descending channel and still has the right to go lower. MACD, just like on the Bitcoin chart, is constantly trying to make a bullish breakout, but so far still unsuccessfully. Breaking through the $2.2 trillion level is crucial for sustaining the upside.
Altcoin market capitalization
A very interesting thing can be noticed on the chart of the altcoin market capitalization (excluding Bitcoin and Ethereum). First of all, the formation of a descending channel was clearly negated. At the same time the capitalization of altcoins for the third time tests the area between 585 billion USD and 625 billion USD (grey rectangle). This may indicate a potential triple bottom, especially as the MACD suggests an upcoming upward movement.