The bitcoin price has been remarkably stagnant in recent weeks, with the flagship cryptocurrency’s volatility declining to a 17-month low on Oct. 8.
Analysts including Bloomberg Intelligence commodity strategist Mike McGlone have said that this could be an indication the cryptocurrency market is beginning to establish itself into a maturing asset class. But while declining volatility may make the case that bitcoin is a store of value a bit more plausible, cryptocurrency investors, particularly those who placed their bets when the market was near an all-time high, would prefer that BTC plateau while trading near a peak — not languishing in a valley.
EToro senior market analyst Mati Greenspan says that the market may soon return to its volatile roots, as bitcoin looks poised to awake from its slumber.
Writing in market commentary made available to CCN.com, Greenspan said that bitcoin’s range has steadily been getting narrower, so much so that it has now reached a tip. This, he said, is a “classic breakout pattern.”
Greenspan further noted that on the two previous occasions in 2018 when this pattern has occurred, the bitcoin price has broken out to the upside, suggesting that we will see a similar occurrence within the near future.
That breakout could throw the bitcoin price into even more bullish territory. BTC is currently trading below its 200-day moving average (DMA), as it has been for some time. The market has made “about a half dozen” attempts at breaking through that resistance line since declining below it; however, it has bounced off every time. Consequently, Greenspan believes that a strong breakout above the 200 DMA could fundamentally alter trading sentiment in the market, stirring up bullish activity heading deep into the fourth quarter.
“In fact, we can see that it [the 200 DMA] has bounced off this line about half a dozen times this year,” he wrote. “A strong breakout above the 200 Day Moving Average could easily flip sentiment from bearish to bullish for many cryptotraders.”
There are signs that this process may have already begun. As CCN.com reported this morning, bitcoin trading volume saw an abrupt increase this morning, rising to $2.53 billion from $2 billion, according to CoinCap.
Along with that increase in volume, the bitcoin price successfully broke out of the $6,550 range in which it had been trading throughout October, rising to $6,640 on Bitfinex as of the time of writing.
If bitcoin can continue to post higher trading volumes, ideally surpassing the $3 billion mark, it could challenge resistance at $7,000. This will not be an easy task, as BTC failed to make a sustained push past that mark in mid-September. However, if it does, it could be a sign that, as Blockchain Capital’s Spencer Bogart predicted last week, the market has found a bottom.
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Last modified: March 4, 2021 3:47 PM