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Cryptocurrency Market Update: Bitcoin historic pump to the moon or plunge to $6,000?

  • Bitcoin price trading very close to the long term descending channel resistance.
  • BTC/USD must hold above the 50-week SMA to avert dire losses likely to refresh $7,200 and $6,400 supports.

Bitcoin has been in deep slumber for several weeks now. As discussed earlier, the volatility level has gone down to extreme levels with the Bollinger Bands constriction becoming tighter. Although the consolidation and almost motionless price action are boring for many participants in the market, they highlight the possibility of a breakout and volatility making a comeback in the market.

Bitcoin technical outlook

The weekly chart allows us to have a wider scope of Bitcoin price action, especially now that the market is in consolidation. Since May 2019, Bitcoin has been grinding lower within a wide descending channel. The support of the channel was instrumental in holding Bitcoin from crashing to $3,000 in March 2020.

The price is trading very close to the channel resistance at the time of writing. The 50 SMA also contributed greatly to holding Bitcoin above $8,500 since May. The moment a breakout occurs from the consolidation, a rally is likely to step past $10,000, particularly if Bitcoin rises above the long term channel resistance (trendline).

BTC/USD weekly chart

BTC/USd price chart

For now, consolidation will continue to carry the day based on the sidelong moving RSI and MACD. The latter is holding above the midline, although a bullish divergence above it hints that buyers have an upper hand.

On the downside, if Bitcoin retreats under $9,000 as well as the support at $8,500, the chances of holding above the 50 SMA would become slimmer. In this case, spiraling below $8,000 would be a possibility. Support is envisioned at $7,200 and $6,400 respectively. Such a move would not be welcomed but historical.

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