February 1, 2023

Bitcoin emerges from the triangle completing the consolidation phase

Bitcoin emerges from the triangle completing the consolidation phase

For almost three months, the Bitcoin (BTC) chart has been drawing a typical technical analysis figure - a triangle. Now this figure is close to completion, and a major new movement is likely in the coming days. But where?

At the peak reached on June 26, the Bitcoin exchange rateapproached $ 14,000 - he has not been so high since January 2018. But after only 3 weeks, on July 17, BTC was already "resting from the jump" a little above $ 9,000. Since then, the first cryptocurrency has not gone beyond the limits of this range.

Long correction always gives rise to the marketuncertainty and anxiety, especially when it comes to volatile assets such as cryptocurrencies. Traders and analysts know that after a long consolidation of the price at about one level (and now Bitcoin has been dancing around $ 10,000 for a long time), the price makes a big breakthrough, covering a distance comparable to the width of the consolidation.

Triangle is one of the most classic"Corrective" figures. Thus, after exiting the existing triangle, bitcoin can either return to historical highs or collapse to the levels of the beginning of “cryptocurrency”.

But any market consists of real traders withreal money, and behind each figure on the chart there is a change of mood of large groups of people with large capitals. And all price movements are generated by events in the real world, even if they become known later than the movement itself.

News background

What economic, social and political factors today may be decisive for the movement of bitcoin up or down?

Many people associate the “Crypto Spring” of 2019 withthe development of corporate cryptocurrencies of social networks - TON (recently launched a test network) and Libra. But in reality, the development of these projects is unlikely to have a positive impact on Bitcoin and other independent cryptocurrencies: social network tokens are centralized, dependent on parent corporations and regulators. And at the same time, they are very weakly connected with public blockchains. Rather, their successful launch will take away some of the audience and money from Bitcoin: many investors may prefer regulated tokens. But now, these projects are facing active opposition.

Institutional investors, on the other hand, are allStill interested in the cryptocurrency market. This is evidenced by the ongoing attempts to bring cryptocurrency ETFs to the market (regulated mutual funds from one or several assets traded on stock exchanges), and the growing volumes of Bitcoin futures trading on CME, and the creation of new platforms for trading already delivered futures.

Perhaps the last factor promises the mostpositive dynamics: after all, settlements on delivery contracts require the purchase of real bitcoins, and they will have to be taken either from the market or from large holders. One way or another, the demand for bitcoin will increase. The first of these platforms, Bakkt, was launched yesterday. This is a significant news feed to exit the protracted consolidation.

Do not discount trade wars andgrowing political tensions, and signs of an impending recession in Europe, and perhaps a new wave of devaluation of fiat currencies. For Bitcoin, this will be another test for the status of a “protective asset”: has the cryptocurrency matured in order to compete with gold and other “shelters”?

Mining capacities and demand forequipment, and the process of accumulation and concentration of bitcoins. A little more than six months remain until the next halving of the award to BTC miners. All of these indirect factors also contribute to the future growth of bitcoin.

What does the BTC chart mean?

Below are two recent Bitcoin chartsfew months. On the first - a daily chart with a triangle against the backdrop of growth since December last year, called "cryptocurrency", on a logarithmic scale:

Bitcoin emerges from the triangle completing the consolidation phase

As you can see in the graph, the main scenarioimplies continued growth, as against the background of a long-term movement, the current correction looks rather modest. But markets are unpredictable, and alternative scenarios always exist, all the more so as bearish sentiment intensifies during the correction.

This same triangle is depicted in a larger close-up on a 12-hour chart:

Bitcoin emerges from the triangle completing the consolidation phase

For a wave, this triangle can be consideredexemplary: the classic lines 0-B-D and A-C- (E) are respected and throughout the whole figure there is a constant drop in trading volumes. Now the lines are getting closer to convergence, which means that the spring is tightened and the breakthrough is getting closer.

But also the “red” scenario, suggesting developmentcorrection, in the current structure looks no less convincing, especially since the top line has a steeper slope. This means that the forces of the “bulls” and “bears” are approximately equal, and the scenario of going up makes only a higher-level picture a priority.

Stock glasses are more full in the directionpurchases, but with a strong downward movement, many traders will cancel orders and may even open speculative sell positions. Consequently, the situation will remain tense at least until the “go-ahead” for bidding at Bakkt, which is expected tonight Moscow time.

Where will Bitcoin go tomorrow?

Nobody knows this, not even Satoshi Nakamoto. But the fact that another major movement is brewing, we can speak with confidence. The longer the lull, the stronger the storm. Today, her signs are visible more clearly.