Bitcoin Continues Consolidation But Are Whales About To Drive The Crypto Higher?

Bitcoin BTC/USD was trading flat on Thursday in an ongoing 13-day consolidation phase following a 30% drop between Jan. 18 and Jan. 22. The crypto has been in a long-term bear cycle, declining a total of 46% from Nov. 10 to trade just below the $37,000 on Thursday.

When a stock or crypto trades in a horizontal pattern for a long period of time it indicates a period of either accumulation, which is eventually followed by a move higher, or distribution, which is followed by a move lower. Data suggests Bitcoin is likely in an accumulation phase, however, where short-term traders are capitulating and selling while whales with larger sums to invest are holding and buying.

More buying power for Bitcoin and other cryptocurrencies may come from India soon as well after the country announced its plans to tax crypto gains at 30%, which indicates the country is moving toward regulating virtual assets.

Whether Bitcoin will eventually break bullishly or bearishly from its tight trading range may take some time longer to be seen, but when it does, a period of volatility is like to ensue and traders and investors can watch for key patterns and support and resistance levels to guide them.

See Also: How to Buy Bitcoin

The Bitcoin Chart: On Thursday, Bitcoin dropped bearishly from a rising channel the crypto had been trading in since Jan. 22. The bearish break did not happen on above-average volume, however, which indicates that either the pattern wasn’t recognized by algorithms or that there is just an overall lack of interest in the crypto.

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The break down from the channel caused Bitcoin to negate its uptrend when it printed a lower low under the Jan. 31 low of $36,640.94. Some bulls came in and bought that dip, however, which caused the crypto to wick up from its low-of-day and if Bitcoin closes the 24-hour trading session above the $36,600 level, it will print a hammer candlestick on the daily chart, which may indicate higher prices will come on Friday.

Bitcoin’s relative strength index (RSI) is hovering near the 34% level and trending downwards. When a stock or crypto’s RSI nears or reaches the 30% level it becomes oversold, which can be a buy signal for technical traders.

Bitcoin is trading below the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending below the 21-day, both of which are bearish indicators. The eight-day EMA is acting as a strong level or resistance and has been mostly guiding Bitcoin down since reaching its all-time high.

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• Bulls want to see big bullish volume come in and break the crypto up from the sideways pattern, which will cause the crypto to regain support of the eight-day EMA. There is resistance above the area at $38,105 and $39,600.
• Bears want to see big bearish volume come in and break Bitcoin down below the $36,000 level, which could cause the crypto to test support at $35,593.22. Below the level, there is further support at $32,200.