Over the past 11 days, the Bitcoin price has remained stable in the range of $6,300 to $6,500, struggling to initiate a major movement on the upside.
The volume of Bitcoin has declined substantially over the last 72 hours from $3.6 billion to $3.1 billion on CoinMarketCap, by nearly 20 percent.
Trading activity in the cryptocurrency exchange market has generally subsided, as investors have started to avoid taking high-risk, high-return trades in a period of uncertainty.
Support and Resistance Merging: Where is Bitcoin Headed to Next?
Since early August, for nearly three months, Bitcoin has shown a record high level of stability. The dominant cryptocurrency has not seen such a low level of volatility spread out across several months in recent history, even during the aftermath of the 2014 correction.
Bitcoin has stabilized in the lower price range to the point in which its support and resistance levels started to merge. Previously, respected cryptocurrency trader Peter Brandt stated that the short-term price trend of Bitcoin can be considered as a classic Wyckoff hinge behavior, which could lead to a major short-term rally for the asset.
However, Willy Woo, a prominent cryptocurrency analyst and operator of Woobull.com, stated that based on various technical indicators including the NVT Ratio, the cryptocurrency market is likely to be in the middle of a long-lasting bear market.
“If you’re into timing games, then my own NVT Ratio is saying we are still in the middle of a bear market. NVT is simply the ratio of volume carried by the blockchain to the historic price. (This indicator is due for recalibration after the Liquid Sidechain launch).
Woo added that the correlation between network volume and market cap of major cryptocurrencies like Bitcoin could serve as an accurate indicator to measure the depth of the current bear market, referring to the NVT chart published on Woobull.com below.
“This is the chart that NVT is based upon; the historically tight correlation between the value transmitted by the chain (network volume) and network value (market cap). The deviation we are going through right now are clues to how much of a bear market we are in.”
If the cryptocurrency market is in fact in the midst of a long-lasting bear market, it does not mean that a large drop is in play. It is possible for BTC to demonstrate another substantial drop in the long-term but given the level of stability it has demonstrated throughout the past three months, a drop below the $6,000 support level is highly unlikely.
Where is Bitcoin Headed to?
In the days to come, the price of Bitcoin is expected to remain in the tight range of $6,400 to $6,500 due to its low volume. But, a major catalyst could send the price of the asset up to the $6,800 mark, a major resistance level which the asset has not been able to test since September.
Featured Image from Shutterstock. Charts from TradingView.
Last modified: March 4, 2021 3:04 PM