Over the past few weeks, Bitcoin (BTC) has finally started to slow, establishing $7,000 as support and $7,800 as heavy resistance; the cryptocurrency hasn’t broken above or below those boundaries for over 10 days.
Analysts say that this tightening price action is much like a spring coiling, implying that Bitcoin will soon see a large price movement that may determine this market’s directionality for the next few weeks, maybe months.
But that begs the question, in which direction are analysts expecting crypto assets to move in the near future? And why?
Crypto Market Coiling for Breakout
Popular trader Big Chonis recently noted that Bitcoin’s Bollinger Bands on the one-day chart are starting to consolidate, tightening as prices have stagnated in the low-$7,000s range.
Brief aside: Bollinger Bands are a technical analysis tool “defined by a set of lines plotted two standard deviations (positively and negatively) away from a simple moving average,” as Investopedia explains. These bands measure market volatility.
The last time Bitcoin’s Bollinger Bands were this time, the analyst noted, the cryptocurrency saw strong 15%+ moves. Should history repeat, the cryptocurrency may be primed to see a “much bigger move” than what has been seen over the past few days.
Another popular analyst has corroborated this, noting that BTC has seen a series of lower and lower highs and higher and higher lows over the past few days, implying widespread indecision in this market, and thus impending volatility.
Bitcoin Analysts Optimistic, Not Worried
Right now, it seems that bulls have the upper hand.
Firstly, Top trader Cantering Clark recently observed an “uncanny resemblance” between the BTC price action seen over the last few days and the aforementioned accumulation phase. Indeed, as Clark’s two charts seen below show, the Bitcoin price action seen then and now are very similar directionality-wise, with there being drops now where there were drops in late-2018 and such.
The similarities suggest Bitcoin may soon explode higher to break out of accumulation.
Secondly, Bitcoin’s weekly chart just printed a golden cross of the 50-week and 100-week simple moving averages, with the former crossing above the latter. An analyst recently pointed out that the last time this was seen, BTC surged by 75% in the four to five weeks that followed the cross.
And lastly, Adaptive Capital’s Willy Woo has found that Bitcoin’s on-chain momentum has started to trend bullish after a multi-month downturn. With this in mind, he asserted that the “bottom is most likely in,” meaning that any move lower than the $6,500 plunge “will be just a wick in the macro view.”
He added that the unnamed indicator also implies that cryptocurrency investors will start to front-run the impending “halving,” the block reward reduction that will be taking place in May 2020.
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