Bitcoin (BTC) has been locked in a narrow trading range for the past 12 days, a situation that is being cautiously observed by market participants. The ability of bulls to defend the crucial support level at $30,000 is viewed as a minor victory in the short term.
Despite the prolonged sideways movement, there is a growing sense of optimism among investors that Bitcoin has the potential to break through upper resistance levels and reach new all-time highs.
Yan Alleman, co-founder of blockchain analytics firm Glassnode, suggests that Bitcoin’s recent consolidation phase may lay the groundwork for an upcoming bullish momentum. The current range-bound trading between $31,200 and $29,600 is viewed as a period of market stabilization, allowing for the reestablishment of positive market sentiment.
To gauge market sentiment and potential price movements, Glassnode has introduced a proprietary metric called the Swissblock Risk Signal. This metric takes into account various factors such as volatility, on-chain activity, and social sentiment.
Based on Alleman’s analysis, the Swissblock Risk Signal has remained stable at 0, indicating a neutral market sentiment with no clear dominance from buyers or sellers. This suggests that market participants are exercising caution and refraining from making significant moves during this consolidation phase.
In light of these observations, Alleman predicts that Bitcoin is likely to break above the $31,200 level, providing a strong foundation for buyers to target resistance levels at $33,000 and $34,800. Even in the event of a breach of support at $29,600, Alleman believes that maintaining a bullish stance until the 50% retracement level near $28,200 remains viable.
This potential pullback could present an opportunity for investors to accumulate Bitcoin in anticipation of future growth. Therefore, Alleman’s analysis suggests that the current market conditions offer a favorable opportunity for those considering an investment in Bitcoin.
Market analyst Michael Van de Poppe warns that Bitcoin is currently at a critical juncture as its price fluctuates within a narrow range. If Bitcoin fails to recover soon, Van de Poppe believes it could test support at $28,500.
Compounding Bitcoin’s challenges is the anticipation of a rate hike prompted by positive unemployment data. This has led to speculation that the Federal Reserve may raise interest rates earlier than anticipated, potentially creating a more challenging economic environment for cryptocurrencies.
If both the major resistance levels at $29,600 and $28,500 give way to selling pressure, the short-term prospects of a bull run may be jeopardized, with a possible retracement to the $27,500 resistance level. This would represent a 9% pullback from the current level of $30,200.
Should such a scenario materialize, it may take time for Bitcoin bulls to regain their current levels. Historical patterns suggest that a consolidation phase typically follows a pullback before any further upward momentum can be regained.