Bitcoin holds at $8,100 support—incoming retrace or continued consolidation? 🚨 This article is 5 years old...
Bitcoin holds at $8,100 support—incoming retrace or continued consolidation?
4 min read
Updated: Dec. 3, 2019 at 7:57 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
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 $6,000 and making new highs on a weekly basis.
??? 300,000,000 USDT minted at Tether Treasury
— Whale Alert (@whale_alert) April 24, 2019
Twitter user @FilbFilb spotted a spike in minted Tethers that could be the catalyst for another upswing.
Oh Boy.$btc still got legs? pic.twitter.com/YyMsgsdFzM
— fil₿fil₿ (@filbfilb) June 11, 2019
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.
#Bitcoin 200 week moving average is growing at 5% per month again pic.twitter.com/4vGm3vjyF8
— PlanB (@100trillionUSD) June 10, 2019
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.
According 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.
Above; $BTC Dominance chart
Below; $BTC 2018 top pic.twitter.com/y67jhuqg6P
— FatihSK (@FatihSK87) June 12, 2019
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.
Due 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.
Peter Brandt, a 40-years trading veteran, recently pointed out that its validity will only be known once it has been completed and confirmed.
I do NOT believe this is a H&S top in $BTC pic.twitter.com/nwng4QwK4Y
— Peter Brandt (@PeterLBrandt) June 10, 2019
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.
Peter, I know you know the Bible of Classical Charting from 1930s. This IS a Head And Shoulder Pattern.
Now I have shown you on the 3D chart. Please elaborate why you think it is not! pic.twitter.com/sBf1v89Vs8
— D4rkEnergY ?? (@D4rkEnergYYY) June 10, 2019
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.
$BTC margin long idea:
This is the part where we rape late bulls
$6500 before 5 Digits
Don't let anyone tell you otherwise
Do yourself a favor and bid 6500
ur welcome#bitcoin #crypto pic.twitter.com/Yx35wBbbek— TheWolfOfAllStreets (@GerardWalker5) June 12, 2019
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.
Possible diamond forming on $BTC. Diamonds can be tricky as the shape can change as they form, but worth keeping an eye on.
Can break either direction out of the consolidation, but typically a reversal pattern which would send us back into the upper $8,000s. pic.twitter.com/d7lG0lwAod
— Jonny Moe (@JonnyMoeTrades) June 12, 2019
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.
If you're shorting bitcoin, you're shorting strength imo. I think shorts are going to get absolutely rekt regardless of any external factors (oi/funding/foreign pair arbs). pic.twitter.com/6lLUBujf83
— CryptoGainz (@CryptoGainz1) June 12, 2019
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:
Periods of BTCUSD price consolidation are like dynamic puzzles with evolving clues. You usually get a small handful of these puzzles a month. There is a lot of money to be made by solving these puzzles correctly more often than not, doubly so in a bull market.
— Murad Mahmudov ? (@MustStopMurad) June 11, 2019
Bitcoin Market Data
At the time of press 7:57 pm UTC on Dec. 3, 2019, Bitcoin is ranked #1 by market cap and the price is up 0.57% over the past 24 hours. Bitcoin has a market capitalization of $133.01 billion with a 24-hour trading volume of $15.09 billion. Learn more about Bitcoin ›
Crypto Market Summary
At the time of press 7:57 pm UTC on Dec. 3, 2019, the total crypto market is valued at at $199.83 billion with a 24-hour volume of $53.2 billion. Bitcoin dominance is currently at 66.62%. Learn more about the crypto market ›
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Bitcoin
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Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
Tuur Demeester is the founder of Adamant Capital, a Bitcoin Alpha fund.
Peter Brandt entered the commodity trading business in 1976 with ContiCommodity Services, a division of Continental Grain Company.
