Bitcoin remaining relatively stable despite a cryptocurrency exchange getting hacked over the weekend is a positive sign for the market’s maturity.
Volatility was expected throughout the week regarding the expiration of a significant amount of futures. However, this didn’t really happen while the macro-economic environment also remains uncertain.
A hack of a major cryptocurrency exchange on Sep. 26 didn’t influence the price at all, which is a positive signal for the markets and a positive signal for the market’s maturity.
However, is this boring price action going to continue for Bitcoin (BTC)? Let’s take a look at the charts.
Bitcoin still stuck in a range on the daily timeframe
BTC/USD 1-day chart. Source: TradingView
Sometimes charting can be relatively simple, and this is one of those cases. The price of Bitcoin fell below $11,100-11,300 earlier this month, establishing new support at $10,000.
The level that has been lost, the $11,100-11,300 zone, is now confirmed resistance as well as the new upper resistance area.
On the downside, a potential drop towards $9,600 wouldn’t be unexpected as the level around $9,600 is still untested with the CME futures gap continuing to linger.
BTC/USDT 4-hour chart. Source: TradingView
The 4-hour chart shows a clear bullish divergence implying a short-term trend reversal. Combined with the overly bearish sentiment across social media, the market was ready for such a relief bounce.
The same bullish divergence was seen with other cryptocurrencies, so the relief bounce was felt across the majority of the market.
However, as stated in the previous analysis, the $10,800 barrier is a crucial hurdle to take. If it can be overcome as a resistance level, the $11,100-11,300 area comes back into play.
This $11,100-11,300 area is the final step before the continuation of the bull market. If Bitcoin’s price can break through that resistance zone, a test of the recent highs at $12,000-12,400 is on the table.
Total market capitalization looking for support
Total market capitalization cryptocurrency 1-week chart. Source: TradingView
The 1-week chart of the total market capitalization of cryptocurrencies is showing a clear pattern. A fresh higher high was printed in the previous months, marking the potential start of a new uptrend.
After a higher high, a new higher low has to be made in which a range-bound structure can be defined. The best area for such a higher low is likely the previous resistance zone, marked green in the chart, or at $250-275 billion, would be a beautiful support/resistance flip warranting continuation.
If that area holds, it also shows why the beginning of a new cycle is relatively dull. During the start of a new market cycle, levels are flipped as support/resistance, after which months of range-bound periods can occur. An example is shown with the price movements of Bitcoin in 2016 (which was also a halving year).
BTC/USD 1-week chart of 2016. Source: TradingView
During these periods, the price of Bitcoin stabilized in an accumulation range throughout 2015. After this accumulation range, Bitcoin’s price broke out and rallied towards the next resistance zone.
This rally ended up with a 6-month long sideways range. A renewed breakout occurred, and another 6-month sideways range started. Hence, the current market sentiment can be compared with that period.
But the real excitement will come when the total market capitalization and Bitcoin break into price discovery (over $20,000) as then potential parabolic runs can come back into play.
The bullish scenario for Bitcoin
BTC/USD 4-hour chart bullish scenario. Source: TradingView
It should be noted that these scenarios are based on lower timeframes (4-hour) and, therefore, should be considered as a short-term outlook.
As the price of Bitcoin is stuck in a range and currently facing resistance, it’s more likely to anticipate a breakdown to the $10,400 area. The $10,400 area is the vital area to hold for any bullish continuation.
If Bitcoin’s price holds here, a potential higher low is defined, which would fuel further upward momentum. As the chart shows, the crucial breaker is the $10,800 area. If that area breaks, the next hurdle becomes $11,150-11,300.
It would be unexpected to see a breakout above that area to occur, but that would warrant an even stronger bullish case.
The bearish scenario for Bitcoin
BTC/USD 4-hour chart bearish scenario. Source: TradingView
The same levels surround the bearish scenario. A failure to break the $10,800 area would present a potential test of the $10,400 area.
As discussed in the previous part, a potential higher low can be made, therefore, reintroduce bullish perspectives. However, if $10,550 fails to break, further downward momentum should be expected, including the still-open CME gap. Who wouldn’t be happier with the closing of that CME gap after these past few months?
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.