Bitcoin price bears are eyeing $7K levels as Bakkt launch appears to not be having an immediate impact on cryptocurrency markets.
With Bakkt launching just a few hours ago, crypto Twitter exploded with somewhat anticipated disappointment at the news of the first Bitcoin trade on ICE Futures US taking place at 8:02 ET.
Twitter users were quick to point out that early orders had a meager value of around 3 BTC, which sluggishly grew to over 18 Bitcoins ($180,000) as the early hours of the official launch progressed.
Bearish Bitcoin breakout
But what can we expect from Bitcoin price this week? Are we expecting explosive growth? Or are we going to see Bitcoin plunge down to levels that will start to shake out short-term holders?
Cryptocurrency market daily overview. Source: Coin360
At present, there’s some bearish sentiment on Bitcoin, though that hasn’t stopped many analysts from suggesting a new altseason could be upon us after several key indicators flashed for the first time in years for Ether (ETH).
Bitcoin price short-term outlook
On the 4-hour chart, the current Bollinger Band range is between $9,800 and $10,200 — much the same as the past week with no real indication that we’re due to see a big breakout.
In fact, the range has opened up since the middle of last week, so another sideways week is looking likely.
BTC/USD 4-hour
BTC USD 4 hour chart. Source: TradingView
Bitcoins weekly outlook
A quick glance over the daily and weekly charts, using BB (Bollinger Bands), RSI (Relative Strength Index) and MACD (Moving Average Convergence-Divergence) can give us a better idea of where the price of Bitcoin is currently at and potential outcomes.
Bollinger Bands: BTC/USD 1-day
BTC USD 1 Day chart with Bollinger Bands. Source: TradingView
The BB is showing that we have broken support on the daily several times in the past week, bringing eyes to the MA (moving average) on the weekly. The MA is around $9,900 on the weekly chart, a level that BTC has already broken past in the last few hours.
This puts the next level of support around $7,700
BTC/USD 1 Week
BTC USD 1 Week chart with Bollinger Bands. Source: TradingView
Relative Strength Index
The RSI on the daily began its descent towards oversold territory last week, falling from 50 to 40. However, if the price continues at the same pace, it could dip below 30 sometime in the middle of next week, signaling oversold conditions and possibly a strong buy zone for traders.
RSI Daily
BTC USD 1 Day RSI. Source: TradingView
The weekly, however, is still in the high 60s, which is a likely factor for a lot of the bearish sentiment lately.
If BTC price continues on this trajectory, it could mean a slow bleed for Bitcoin, but where will people hedge?
If past trends are anything to go by, smart money could start migrating to lower liquidity altcoins pushing the market caps of major altcoins that have been bottoming out over the last 18 months.
RSI Weekly
BTC USD 1 Week RSI. Source: TradingView
MACD
The MACD on the daily crossed down through the signal line on Wednesday last week — yet another strong sign that the bears are truly taking hold.
The last time this happened was mid-August and it took over a month to show any bullish momentum. That being said, it resulted in sidewards chop, which kept the price in a tight range fuelling speculation of a big breakout.
MACD Daily
BTC USD 1 Day MACD Source: TradingView
The weekly on the MACD is equally bearish and has been so for over a month. No significant events such as Bakkt seem to have enough immediate impact to wake up the bulls just yet.
It looks like the charts have spoken, Bitcoin is making its move and this seems to be causing confusion amongst people on crypto Twitter.
MACD Weekly
BTC USD 1 Week MACD Source: TradingView
Altseason
One such confused tweet is that of cryptoamd, which read:
“I don’t understand CT sentiment. Many are calling for $7,400 but expect alts to moon at the same time”
I don’t share the same opinion, as it makes perfect sense from an economic and psychological point of view.
Let’s say you bought Bitcoin at $11,000. You look at the charts, and much to your dismay you see that Bitcoin is currently trading at $9,900 with the prospect of going lower — if you looking at the higher time frames.
Your investment is already down 10%, and panic starts to set in. This scenario is already a reality for people that bought in August, while those that bought at the yearly high in June are already down as much as 30%.
So what are the options for these investors? HODL through the storm? How do you think they will be feeling when BTC heads towards $8,000 or even worse $7,000.
At this point, it becomes entirely plausible that the heard will start eyeing up altcoins, which are known for delivering 20% gains in a single day to recover their losses albeit with much higher risk.
If people start jumping out of Bitcoin into altcoins, $7K Bitcoin and altseason becomes a self-fulfilling prophecy, Bitcoin dominance will fall and altcoin caps will swell with overwhelming demand, and the frenzy begins.
Bullish scenario
While it doesn’t look good for Bitcoin price bulls this week, BTC is yet to significantly break the weekly MA on the Bollinger Bands. If Bakkt momentum picks up, the price could see resistance around $10,630 on the daily.
BTC breaking this level means the next point of resistance is $12,500 on the weekly, and breaking that means a new yearly high is back in play. However, this scenario seems highly unlikely from a technical perspective in the week ahead.
Bearish scenario
Support on the weekly Bollinger sits around $7,700. If this level is broken, BTC price needs to hold $7,150 before the monthly MA is breached. Going any lower could mean a new crypto winter and lows of $2,500 are no longer impossible.
Fortunately, the MACD on the monthly isn’t giving in, and despite a short-term bearish outlook, the charts still show that Bitcoin’s price is still in an overall bullish pattern.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Source: Cointelegraph https://cointelegraph.com/