Why Bitcoin could break away from $20K sooner than later
The world’s oldest cryptoasset has had a quiet week, with prices consolidating in an abnormally tight $1,000 range centered at the key $20,000 level for the last seven days.
In a way, the quiet price action can be viewed as a win of sorts for crypto bulls, given the fact that the typically-correlated Nasdaq 100 index has fallen nearly 3% over the last week, but merely holding steady while alternative investments fall is hardly invigorating, especially after Bitcoin’s dramatic underperformance earlier this summer.
That said, volatility tends to be cyclical, meaning that periods of constrained market movement tend to be followed by periods of rapid, higher-volatility movements when price eventually breaks out. With a series of high-profile central bank meetings and top-tier economic data releases on tap over the next couple of weeks, we could see a big move in Bitcoin sooner rather than later.
As the chart above shows, the medium-term trend remains to the downside after Bitcoin broke below its rising channel midway through last month, so a bearish breakdown below $19,500 may be more likely. In that scenario, Bitcoin could quickly fall to retest its summer lows at $18,750 and $18,000 after that.
Meanwhile, a bullish breakout from this week’s range, if seen, could see short-term bulls target the late August consolidation range just below 22,000, though traders are likely to treat any short-term bounces with skepticism until the longer-term trend shifts more convincingly.
In a way, the quiet price action can be viewed as a win of sorts for crypto bulls, given the fact that the typically-correlated Nasdaq 100 index has fallen nearly 3% over the last week, but merely holding steady while alternative investments fall is hardly invigorating, especially after Bitcoin’s dramatic underperformance earlier this summer.
That said, volatility tends to be cyclical, meaning that periods of constrained market movement tend to be followed by periods of rapid, higher-volatility movements when price eventually breaks out. With a series of high-profile central bank meetings and top-tier economic data releases on tap over the next couple of weeks, we could see a big move in Bitcoin sooner rather than later.
As the chart above shows, the medium-term trend remains to the downside after Bitcoin broke below its rising channel midway through last month, so a bearish breakdown below $19,500 may be more likely. In that scenario, Bitcoin could quickly fall to retest its summer lows at $18,750 and $18,000 after that.
Meanwhile, a bullish breakout from this week’s range, if seen, could see short-term bulls target the late August consolidation range just below 22,000, though traders are likely to treat any short-term bounces with skepticism until the longer-term trend shifts more convincingly.
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