Bitcoin has been trading in a range for the past couple of weeks. Nonetheless, the fact that the bulls have held the crucial $30,000 support level is seen as a short-term gain for BTC.
Although BTC is trading sideways, optimism is growing that it has the potential to break above resistance zones and set new highs. Bitcoin’s fall from a New Year’s high of $31,553 yesterday led to a sharp sell-off to $29,800 on the lower side of the channel.
The Bitcoin price managed to defend the $30,000 level and continues to trade at the bottom of the channel. Even if the volatile daily moves make an impact on the scene, Bitcoin has not crossed either the low end or the high end of the channel to start a new move.
Since then, there have been five attempts for $31,500, all of which ended in a sell-off. Some would say that this resistance is too strong, while others see something positive in this move. The more often a resistor is tested, the weaker it becomes.
Does BTC Sideways Trade Set the Stage for Bullish Momentum?
Bitcoin’s recent sideways trading has paved the way for potential bullish momentum, according to Yan Alleman, co-founder of Blockchain analytics firm Glassnode. BTC’s current trading range between $31,500 and $29,600 is considered a consolidation phase that will allow bullish momentum to be restored in the market.
To gauge market sentiment and potential price movements in the Bitcoin market, Glassnode has developed its own metric called the Swissblock Risk Signal. This metric takes several factors into account, including volatility, on-chain activity, social sentiment, and more.
Relating to Alleman’s analysis, Swissblock’s risk signal has held steady at 0, suggesting that current market sentiment is neutral with no clear dominance of buyers or sellers, which could indicate that the market is in a consolidation phase, as buyers and sellers are cautious before making any major moves.
Furthermore, Alleman predicts that BTC is likely to break above $31,500, providing a strong foundation for buyers to target the $33,000 and $34,800 resistance levels. However, even if the $29,600 support is broken, Alleman believes that the uptrend can continue to the 50% retracement level at $28,200.
Bitcoin Faces a Critical Moment
Bitcoin is facing a critical time as its price fluctuates within a tight range, warns market analyst Michael Van de Poppe. Van de Poppe believes that if Bitcoin does not recover soon, it could test support at $28,500.
Adding to the challenges for Bitcoin is the expectation of a rate hike on positive unemployment data. This leads to further speculation that the Federal Reserve will raise interest rates sooner than expected, which could create a difficult economic environment for cryptocurrencies.
If the two major resistance lines of $29,600 and $28,500 give way under pressure, a potential short-term uptrend could be in jeopardy, which could result in a pullback to the $27,500 support level. Should such a scenario materialize, it could take some time for bitcoin bulls to recover to current levels.
Despite the challenges Bitcoin faces, as long as the price can sustain $30,000, BTC bulls will have the upper hand. Such pullback could be an opportunity for investors to make the next jump into Bitcoin as the market shows signs of potential growth. Therefore, Alleman’s analysis suggests that current market conditions present a favorable opportunity for those looking to invest in Bitcoin.
By Marina Meza
