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Bitcoin holds at $8,100 support—incoming retrace or continued consolidation?

Bitcoin holds at $8,100 support—incoming retrace or continued consolidation?
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Bitcoin encountered an exhaustion point that has confounded analysts. Some analysts were expecting a 20–40 percent correction, but $7,800 resistance held. Is a retrace still on the horizon?

Following the $9,090 high of May 30, Bitcoin encountered an exhaustion point that lead Tuur Demeester, the founding partner of Adamant Capital, to believe that a 20 to 40 percent correction was likely.

Since the $7,800 level of resistance has been able to hold the price of BTC from a further drop, @SatoshiFlipper, a real estate developer, and cryptocurrency investor stated that the expected pullback did not materialize due to the maturity of the market.

Bitcoin technical analysis

A popular Twitter analyst under the pseudonym of @FilbFilb recently pointed out a correlation between Tether (USDT) and Bitcoin. According to the analyst, the correlation began around October 2018 before Bitcoin’s dive to $3,135 on Dec. 15 that same year. During that time, a massive amount of USDT was burned as BTC started declining.

In late April, a similar pattern occurred. Around $300 million USDT was minted while Bitcoin was climbing back to $6,000 and making new highs on a weekly basis.

Twitter user @FilbFilb spotted a spike in minted Tethers that could be the catalyst for another upswing.

Adding to the bullishness, another analyst on Twitter, @100TrillionUSD, shared a chart that depicts the recent Bitcoin price action and its growth in the 200-week moving average (MA), indicating that a bull rally is close.

The 200-week MA is one of the most relevant indicators for Bitcoin traders since it reveals the strength of the long-term trend. It acted as a support point in previous bear markets, containing the price from a further drop while serving as a reference point for new bull trends. Currently, the 200-week MA is growing at a 5 percent monthly rate, which is a bullish sign.

On the 1-week chart, however, the TD Sequential Indicator gave a sell signal with a green nine last week. This technical index predicts a retrace that could last one to four weeks before the bullish trend continues.

Since Bitcoin has not been able to trade below the 7-week moving average, the bearish signal has not been validated, but if it does, a drop down to the 50 or 30-week moving average could be expected. Breaking above the previous high of $9,090 will invalidate the bearish setup and higher highs will come.

bitcoin technical analysisAccording to @FaithSK, a technical analyst, Bitcoin could actually be about to correct, which will decrease its market dominance as altcoins benefit from the drop. A fractal study between BTC’s all-time-high top and its market dominance adds credibility to the idea.

In order for a correction to happen, Bitcoin will have to break below the support trendline, which has acted as a strong barrier since the beginning of April based on the 3-day chart. A move below it could take BTC to test the $6,200 support level.

At the moment, BTC is at a pivot point sitting below the $8,200 resistance and above the support trendline. A move above resistance with enough volume could take it to $10,000, while a move below support could be the beginning of a sharp decline in market valuation.

btc technical analysisDue to the importance of Bitcoin’s current trading level, there is a $600 no-trade zone between $7,600 and $8,200 on the 1-day chart. It would be wiser to wait for a break out of this trading range before entering a bearish or bullish trade.

Nonetheless, a head-and-shoulders pattern seems to have been developing since mid-May under the same time frame. The right shoulder is still forming, but breaking below the neckline sitting at $7,600 could trigger an 18.5 percent plunge. This bearish technical formation will be invalidated if BTC moves above the right shoulder at $8,200.

bitcoin pricePeter Brandt, a 40-years trading veteran, recently pointed out that its validity will only be known once it has been completed and confirmed.

Brand’s tweet caused furor among analysts who thought his statement was contradictory since he had recently posted an Ethereum chart with a H&S pattern similar to Bitcoin.

A Twitter analyst under the pseudonym of @D4rkEnergYYY slammed Peter Brandt, suggesting that based on the book the Bible of Classical Charting the shape meets the criteria needed to be considered a head-and-shoulder pattern.

If the bearish formation is confirmed and Bitcoin drops 18.5 percent to around $6,300 to $6,500, Gerard Walker, explains that this could be the right time to go long. The trader stated that $6,500 will be a confluent price point based on the Elliot wave principle, which at that price would initiate a new primary wave.

On a short-term view, Jonny Moe, a day and swing trader, believes that a diamond pattern could be forming on the 2-hour chart. A diamond is a reversal formation that could break in any direction. Upon the break, an 8 percent increase or drop could be expected.

Overall Sentiment

Bitcoin is at a pivotal moment that will determine the future of the market. Under the current conditions, this cryptocurrency can be considered “non-tradable” until it breaks above the $8,200 resistance or below the $7,600 support level.

Even if BTC breaks to the downside, it is worth noting, as @CryptoGainz stated, that entering a short trade could be extremely risky because the cryptocurrency market has been in a bull rally since the beginning of the year. Trading against the bigger trend could jeopardize an investor’s capital.

Therefore, It will be wiser to wait and see if the retrace that BTC has experienced extends, giving opportunities for investors to re-enter the market. Or, if volume picks up, allow for the continuation of the bullish trend.

Until then, the best option is to wait on the sidelines while a clear trend is confirmed. As of right now, this could be considered a consolidation period as Murad Mahmudov, CIO at Adaptive Capital, explained:

Bitcoin | BTC

Updated: Jun 14 at 7:33 pm PDT
$8,658.48
5.54%

Bitcoin, currently ranked #1 by market cap, is up 5.54% over the past 24 hours. BTC has a market cap of $153.77B with a 24 hour volume of $20.08B.

Chart by CryptoCompare

Bitcoin is up 5.54% over the past 24 hours.

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Filed Under: Bitcoin, Price Watch, Research, Technical Analysis
Ali Martinez

After Ali began forex trading in 2012 In 2014, he came across Bitcoin’s whitepaper and was so fascinated by the idea of a decentralized, borderless, and censorship-resistant currency that he started buying Bitcoin. By 2015, he started traveling to spread the word about Bitcoin.

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