Will Bitcoin (BTC) Consolidate Around $10,000? Analysts Sure Think So
Bitcoin Consolidation Inbound
Volatility is back in full swing in these Bitcoin (BTC) markets. Ever since falling under $10,000 yesterday, BTC has been in a bit of a tumult, finding itself everywhere from $9,750 to $10,800. While some are expecting a large breakout to the upside, some have suggested that BTC will continue to consolidate in this range for maybe a few more weeks. Here’s why.
As Twitter statistician PlanB points out, Bitcoin’s 12-month Relative Strength Index (RSI), an indicator meant to determine if an asset is “overbought”, “oversold”, or otherwise, has struggled before surmounting 70.
In 2012, 2013, and 2016, this technical reading has always fallen and consolidated around 50 to 60 before breaking past 70. This time is no different. If history is of any indication, BTC may continue to consolidate for a few months, which would most likely translate to Bitcoin establishing a range around $10,000.
That’s not all. As analyst Teddy Cleps points out, Bitcoin recently managed to bounce off the key 200-day exponential moving average. But, historically, as seen in the chart published below, BTC made contact with this key trend line multiple times to confirm support, then rallied after double or triple bottoming. The reason why this is, according to Teddy: consolidation allows for moving averages to coalesce; and the Moving Average Convergence Divergence (MACD) can flatten out for the next move.
Also, a Twitter user going by “CL” points out that since becoming a liquid, tradable asset, Bitcoin has tended to consolidate for months on end at key psychological price points — these being the powers of 10, $1, $10, $100, $1,000, and $10,000 of course. When BTC found itself at parity with the dollar, it took 77 days for it to break out. Each consolidation period has been anywhere from three to six months.
So, if history is of any indication, BTC is likely to stabilize around current levels. According to popular cryptocurrency-centric Youtuber Omar Bham, the range that Bitcoin will find itself in will be $8,800 and $14,000 — which are notably the top of May’s trading range and top of June’s trading range respectively. Bham backs his prediction by citing “data from traders [he is] inclined to trust over others.”
Long story short, many analysts aren’t expecting for Bitcoin to rally past the local top of $13,800 any time soon, and are instead waiting for the cryptocurrency market to enter a (dare I say much-needed) second accumulation phase, one that could last for a couple of weeks at the minimum.