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Bitcoin has experienced a relatively volatile week, trading between lows of $3,550 and highs of $3,750. This choppy trading has given analysts more guidance as to what trading range Bitcoin is currently caught in, which also signals where the cryptocurrency may be heading in the near future.
One analyst now believes that BTC’s ability to maintain above the $3,500 region is allowing it to gear up for an upwards move towards $5,000.
Bulls Could Push Bitcoin to $5,000 if Support Continues to Hold
In the long-term, analysts have expressed that Bitcoin is likely caught in a relatively large trading range between $3,000 and $5,000. Within this, BTC’s recent price action signals that it is likely caught in a much tighter trading range between $3,550 and $4,200.
Mati Greenspan, the senior market analyst at eToro, discussed the cryptocurrency’s new trading ranges in a market update from earlier this month, saying:
“As we’ve been discussing since mid-November, the current range is from $3,000 to $5,000… It seems now, that bitcoin has opened a new mini-range within that from $3,550 to approximately $4,200… Movements within a range can sometimes be sudden like we saw yesterday, but unless there’s a breakout of the key levels there really isn’t much to write home about.”
While speaking to Forbes, Jon Pearlstone, the publisher of the CryptoPatterns newsletter, said that as long as bulls are able to maintain the $3,500 region as a level of support, Bitcoin could surge to $5,000 as the result of an inverse head and shoulders pattern that has been forming since November of 2018.
“Since mid-november [sic], bitcoin has built a clearly defined bullish inverse head and shoulders pattern with a target in the $5000 range… The most recent move back down to retest key support at $3500 was expected as part of this pattern, and the current consolidation continues to offer an edge for the bulls as long as support holds above $3500,” Pearlstone explained.
Bitcoin Volatility Gradually Decreasing
In addition to forming some positive technical formations, Bitcoin’s volatility has been steadily decreasing over the past two weeks.
Eric Ervin, the CEO of Blockforce Capital, spoke to Forbes about the decreasing volatility, saying that is its currently at its lowest point since mid-November of last year.
“Despite bitcoin’s recent volatility spikes in December and early January, its rolling 14 day volatility has been steadily declining — trending downward from a peak of 140 on November 28th to today’s value of 60… This is the lowest volatility we’ve seen since mid-November 2018,” Ervin explained.
Furthermore, Ervine also shared Pearlstone’s cautiously bullish sentiment, noting that he believes there is a high likelihood of Bitcoin surging in the near future.
“In the roughly six days bitcoin has traded above $3,500, we’ve witnessed what looks like an early stage pennant formation… We therefore expect there is a high likelihood of a decent breakout in the near future, although it’s still too early to tell which direction the market will go,” he explained.
Featured image from Shutterstock.
