08 Aug 2020 #Bitcoin
The price of Bitcoin has successfully tested a new support zone before the weekend but will it be enough to finally push above $12,000? The price of Bitcoin (BTC) is facing its final resistance zone until the bull market is on fire. However, will it break through this resistance zone in one attempt? The charts suggest that the $11,600-12,000 area is a crucial level to break if the price of BTC is to continue moving higher.
As the price of Bitcoin couldn’t break through that resistance zone, a slight drop occurred on Friday from $11,900 to $11,350, after which BTC has managed to pare most of the losses since.
BTC/USD is still fighting at the resistance zone at $11,800-12,000. Unfortunately, no breakout just yet, while silver and gold have been showing more strength recently. There’s a clear resistance zone at $11,800-12,000. This is a significant level as it is the final untested level until Bitcoin enters open air.
If there’s a breakthrough in this resistance zone, Bitcoin’s price can easily run toward $15,000-16,000. Such a run would only increase the FOMO, or fear of missing out, in the markets. However, such a run is currently unlikely, especially given the recent breakout at $10,000.
In other words, as Bitcoin’s price went vertical since $9,500 toward $12,000, a breakout above this resistance becomes less likely as there’s no buildup. If an asset wants to break through such a significant resistance, it usually tests the level multiple times before it breaks through.
For example, the consolidation period (similar to the months after the recent Bitcoin halving) resulted in the strength and momentum that finally pushed BTC/USD above $10,000. Nevertheless, a breakout above the resistance zone at $11,800-12,000 is not entirely out of the question.
As Bitcoin’s price dropped from $11,900 to $11,400 last Friday, the previous resistance zone at $11,400 was confirmed as a support level. Such a test is called a support/resistance flip and is very common across markets.
Either way, the volatility will kick in once Bitcoin’s price breaks through either of the two zones. If Bitcoin’s price breaks through the resistance zones, continuation is likely toward $15,000. However, if the opposite occurs and Bitcoin’s price loses $11,300, a drop toward $10,700 will be the next level to test.
The total market capitalization of crypto is facing significant resistance, confluent with the resistance of Bitcoin with $350 billion being the final major hurdle before a move of 30% to $500 billion can occur.
The chart also shows that the total market capitalization is still acting above the 100-day and 200-day moving averages (MAs), a crucial signal for bull markets. If the market capitalization moves above these MAs, the market is in bull territory, and dips should be considered as buying opportunities.
Essentially, the previous resistance zone at $290 billion is the crucial level to hold. As long as the total market capitalization of crypto stays above $290 billion, further upward momentum is likely.
Breaking $12,000 underpins the bullish scenario. If the resistance area finally breaks as resistance, $15,000 then becomes a likely target for the bulls.
However, a clear breakout through the $12,000 area can only be confirmed with a support/resistance flip. This would suggest that buyers are stepping in as the previous resistance transforms into new support.
The bearish scenario means that $12,000 was not broken. If the resistance continues to be resistance, a renewed range-bound structure will likely occur in the coming weeks.
Another argument can be found in the forex markets. The recent breakout of Bitcoin occurred while EUR/USD broke upwards from 1.14 to 1.19. This breakout led to a drop of the USD against other currencies, which essentially triggered the massive breakouts in Bitcoin, gold, and silver prices.
If EUR/USD starts to correct from 1.19 to lower numbers, the USD is getting stronger. Such a relief bounce will most likely trigger a further corrective move on the crypto and commodity markets, leading toward the scenario described above.
A range-bound period wouldn’t be bad for the markets, however, as altcoins have been doing relatively well in these times. If Bitcoin’s price starts to correct, the focus could once again shift to altcoins.
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