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The world’s largest cryptocurrency, bitcoin, failed to break out of the $ 40,000 level this week, and after four days of continued decline, it fell to the $ 37,000 level on Wednesday. However, technical charts suggest that the overall crypto market may end consolidation sooner rather than later.
The larger market’s Bollinger Bands, which measure one standard deviation from its 20-day simple moving average, have started to contract in recent weeks.
Historically, contractions point to an inevitable upturn in market volatility. Now it is not clear whether we see market volatility increasing in a week or a month. But it’s fair to say that the consolidation we’ve seen over the past few weeks is likely to end sooner or later, ”Kraken Research said in a note.
According to the note, Bitcoin’s inability to maintain the $ 40,000 level as support should not come as a surprise, as historical price developments suggest that the bulls are likely to struggle to break above the resistance of $ 40,000 to $ 42,000.
Bitcoin was capped this week, trading between $ 35,000 and $ 40,500. The asset rebounded about 8.5% around the middle of the week and hit the $ 41,300 area.
According to the ZebPay cryptocurrency exchange, the market position has been bullish for the asset and volumes have persisted at good levels.
Another tweet from Tesla CEO Elon Musk suggested that Tesla would accept bitcoin as a medium of transaction when miners who verify transactions use more renewable energy, causing this trend to rise. As the asset continues to follow the uptrend, whales appear to be building up in anticipation of a price hike, once again making bitcoin everyone’s favorite, ”said Nirmal Ranga, vice president of commerce. , ZebPay.
Last week, Bitcoin created a Dragonfly Doji (Trend Reversal) pattern where the lower longest shadow indicated buying in the $ 31,000 support area and jumped nearly 33.2%, reaching the top. weekly $ 41,322.
Technically, over a daily period, the asset has again faced resistance around these levels and made a Spinning Top candle which makes it difficult to predict the direction in which the asset will tip in the immediate future. Prices have fallen by almost 10% over the past 2 days. For another rally to take place, bitcoin must trade and close above the resistance of $ 42,500, “Ranga added.
Bitcoin’s first key support is at $ 34,635, then at $ 31,111, while initial resistance is at $ 40,900, then at the $ 42,500 level.
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