After the four days of solid gains it appear Bitcoin has run out of steam and passed the torch to the altcoin market. Looking at markets this morning, Bitcoin has revealed itself as one of the few top 10 cryptocurrencies trading in the red, with a 1.5 percent decline over the past 24 hours. Ethereum (ETH) and XRP by comparison, are up 9.1 percent and 14.5 percent respectively. However, the real big winner of the day is Tezos (XTZ) with a huge 20 percent in gains.
The Bitcoin price change is not unexpected as many analysts have predicted over the past few days that Bitcoin’s bull run was likely to hit resistance and either enter consolidation or crash back down to previous resistance levels. The fact that it is still holding strong just below $8,000 is a good sign, as this may create a decent support level which will keep it secure when the next rally begins.
What are the analysts saying?
Josh Rager, a trader and investor at Level Invest, posted a graph on Twitter yesterday that has garnered a fair level of attention. It’s a commonly used graph showing Bitcoin on a logarithmic scale, which helps to accentuate the percentage gains the asset has enjoyed between cycles since 2011.
Looking ahead, if the Bitcoin price continues to move within the pattern represented in the graph, we should see highs of $78,500 – although only by 2022. However, the graph does reveal how previous cycles have enjoyed peaks mid-cycle which often touch levels 30 to 40 percent as high as end-cycle levels. This means we could certainly see Bitcoin touch $30,000 this year before a minor correction and then a much bigger rally into 2021.
Popular Twitter trader $carface (@TraderScarface) posted an interesting graph investigating Bitcoin’s dominance over the past few years, specifically highlighting its extreme drop in 2017 when altcoins began to gain popularity. He foresees Bitcoin’s dominance once again entering a period of decline following this rally as focus turns to altcoins. However, he points out that the drop will likely not be as extreme because “those holding the Bitcoin bag this time have very, very, very strong hands.”
Bitcoin will likely continue to face weak resistance below $8,000 (SMA5 and SMA10 4-hour) and above that at the previous high of $8,350. Looking further, $8,700 is the strong resistance point but it’s unlikely we’ll see it any time soon. Support stands at the previous low of $7,600, with the pivot point 1-month resistance at $7,550 and lower 5-day moving average resistance level at $7,250.
The 100-day and 200-day moving averages are still in excellent positions but the 14-day relative strength index (RSI) at 86.09 now puts Bitcoin in ‘extremely overbought’ territory. While this doesn’t necessarily indicate an impending downturn, it wouldn’t be altogether surprising.
BTC is currently trading at $7,968 with a market cap of $140.21 billion.