Bitcoin Price Consolidates North of $4,000 Following String of Upbeat Gains
Bitcoin’s price action narrowed on Friday, as the leading digital currency found support just above $4,000, raising optimism of a renewed bullish trend. That being said, the path to $5,000 and beyond faces several technical hurdles that will rely on a substantial shift in sentiment to break through.
The bitcoin price printed a high of $4,300 on Bitfinex Friday,setting a new short-term benchmark for the bulls. At the time of writing, BTC/USD was valued at $4,162, having declined 1.4%. Competing exchnages like Coinbase, Bitstamp and Gemini were quoting a BTC price between $4,030-$4,035.
Looking at aggregate price data, bitcoin’s average value is $4,060, according to CoinMarketCap. That represents a decline of half a percent over the continuous 24-hour cycle.
As the monthly chart illustrates, bitcoin is trading at its highest level in over three weeks but has seen its momentum shift lower following multiple breaches into oversold territory (via RSI). Price has moved above the 100-period MA, which is currently valued at $3,964.
Trading volumes in BTC remain elevated following the midweek rally. At the time of writing, 24-hour turnover was valued at $8.1 billion, with BitMEX processing nearly 30% of exchange-based volumes. CoinBene, Binance and OKEx were the largest spot markets for bitcoin trades.
Bitcoin has returned over 24% in the last five days, signaling a momentous shift in investor sentiment following a prolonged period of lower lows and lower highs. The corrective rally is unlikely to spawn a full-blown breakout given the multiple resistance levels seen en route to $5,000. According to analysts, a breakout of the $5,000-$5,500 range is needed to confirm the bullish reversal. Beyond that, a return to $6,000 is needed for hundreds of thousands of miners to resume their operations.
While upside could be limited, the market’s behavior over the last week suggests that bitcoin has established a new price floor near $3,000. This time last week, a break below $3,000 seemed imminent following the waves of selling that took place and the overwhelmingly bearish position on BTC in the futures market. However, over that period, trade volumes have risen substantially with several leading exchanges reporting a significant surge in activity.
Looking ahead, bitcoin is likely to trade in a much wider range than the volatility index implied between June and November. This means a long-term range between $3,000 and $6,000 could be in the cards.
The Crypto Dog, a prominent bitcoin analyst active on Twitter, said Thursday he expects the price to “range between an absolute low of $1,800 to an absolute high of $6,200 … for a substantial period of time.” He indicated that a range between $3,000 and $5,400 is more likely.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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