Home / Archive / Is Bitcoin Primed to Initiate a Rally Above $7,000 After Weeks of Stability?

Is Bitcoin Primed to Initiate a Rally Above $7,000 After Weeks of Stability?

Last Updated March 4, 2021 3:03 PM
Joseph Young
Last Updated March 4, 2021 3:03 PM

Throughout the past ten days, the Bitcoin price has remained in a tight range from $6,300 to $6,500, rarely initiating a noticeable movement.

The 1-day price chart of Bitcoin, as shown below, demonstrates nearly two weeks of stability in the lower price range of the dominant cryptocurrency, unable to engage in a short-term upside movement to confirm a breakout above a major resistance level.

In the past 24 hours, the volume of BTC has fallen back to $3.1 billion from $3.5 billion, by more than 10 percent. The lack of trading activity in the cryptocurrency exchange market can be attributed to the tendency of traders to prevent the initiation of high-risk and high-return trades in a period of extended stability and low volatility.

Breakout Expected

According to prominent cryptocurrency trader and technical analyst Peter Brandt, the price trend of BTC throughout the past ten days demonstrates a classic Wyckoff hinge, which suggests that buyers are in control in the market that has been dominated by bears and sellers since early 2018.

“Wyckoff would classify these past 10 days as classic hinge behavior,” Brandt said.

However, for the hinge to materialize, an abrupt increase in the price of Bitcoin to the $6,800 to $7,000 range to breakout of the $6,800 resistance level is required, which traders are observing at this time.

Due to the low volume and trading activity of the cryptocurrency exchange market, a sudden breakout of Bitcoin in a higher price range is becoming increasingly unlikely, at least in the short-term.

As for technical indicators and minor price movements of Bitcoin, since August 9, the asset has barely made any movement outside of the $6,300 to $6,800 range, portraying the lowest rate of volatility in recent years.

Often, the stability in the price of BTC leads to an increase in value of small market cap cryptocurrencies and tokens. But, the low volume of the crypto market has prevented traders from engaging in risky trades in a market that is highly unpredictable.

Most tokens including Wanchain, Golem, Funfair, Aelf, and Zilliqa have made 2 to 8 percent gains across the board over the last 24 hours.

Positive Development Out of China

Throughout the past several months, with the imposition of a ban on Alipay in settling cryptocurrency-related transactions, the government of China has cracked down on the crypto market, strengthening the existing blanket ban on the asset class.

On October 26, CnLedger, a trusted cryptocurrency source in China, reported  that a local court ruled Bitcoin to be a property and protected under law, reaffirming the legality of owning and holding BTC.

“Chinese court confirms Bitcoin is protected by law. Shenzhen Court of International Arbitration ruled a case involving cryptos. Inside the verdict: China law does not forbid owning & transferring bitcoin, which should be protected by law because of its property nature and economic value.”

While the ruling of the court does not change the inability of investors in China to legally invest in BTC, it is possible to rely on over-the-counter (OTC) markets to purchase crypto and hold onto them.

Featured image from Shutterstock.