- China-based cryptocurrencies surge as bitcoin consolidates.
- If volume picks up, BTC could break above $9,700.
- One of the most prominent analysts in the industry shares his views on the pioneer cryptocurrency for this week.
Following Chinese President Xi Jinping’s decision to embrace blockchain technology, many China-based cryptocurrencies have seen a significant spike in their market value. VeChain, for instance, has moved up a whopping 185% while NEO has skyrocketed nearly 100% since then.
Despite the high volatility seen across these altcoins, bitcoin has been lurking without much action. A renowned technical analyst in the crypto community believes that BTC is on the verge of a significant price movement.
Cryptocurrency blockchain Volume is needed for BTC to rise
The low level of volatility seen in bitcoin over the last three weeks led the formation of a descending parallel channel on its 12-hour chart, which is composed of three parallel lines. Every time BTC drops to the lower line, it rebounds to the middle or the upper one. Conversely, when it surges to the upper line, it pulls back to the middle or the lower one.
Now that bitcoin is trading around the lower parallel line, an increase in volume could take BTC to move back to the upper one. And, if the buying pressure behind it is strong enough, bitcoin could break out of the descending parallel channel. This would allow it to resume its uptrend, considering that this technical pattern is part of a bull flag.
Investopedia defines a bull flag as a continuation pattern, which has been developing on bitcoin’s 12-hour chart since Oct. 25. The uptrend that took BTC to nearly $10,500 formed the flagpole. Meanwhile, the current consolidation phase it entered on Oct. 27 is creating the flag.
This technical pattern estimates a breakout in the same direction of the previous trend. The height of the flagpole presents a 26.50% target to the upside. If validated, bitcoin could surge to $11,300.
Cryptocurrency blockchain The $8,500 support level has been lost
Looking at bitcoin from a long-term perspective, Tone Vays, former VP at JP Morgan and organizer of Unconfiscatable, Understanding Bitcoin and Financial Summit, told CCN that the way BTC is closing the week leads him to believe that it is bound for a further decline.
Assuming the price of bitcoin does not move at all in the upcoming hours before the week ends, the current weekly candlestick would likely close near the lows. Under this scenario, the only thing that I would expect for next week is that bitcoin is going to go lower.
According to Vays, bitcoin appears to have lost the $8,500 support level, which increases the odds for a bearish impulse.
If bitcoin indeed goes lower next week, there is going to be reasonable support around $7,200. This price level is supported by the 50-week moving average and the 61.8% Fibonacci retracement level.
Bitcoin is signaling a move to $7,200, according to Tone Vays. | Source: TradingViewDespite Vays’ bearish outlook, it remains to be seen whether bulls or bears will take control over the price of bitcoin this week.
Disclaimer: The technical analysis above should not be considered trading advice from CCN. The writer owns bitcoin, Ethereum, and other cryptocurrencies. He holds investment positions in different cryptos but does not engage in short-term or day-trading.
This article was edited by Gerelyn Terzo.