Following the launch of Bitcoin Spot ETFs this year, many expected BTC to rocket to 100k. However, trading isn’t actually so simple and Bitcoin has been stuck in a range since March. Let’s dive into the technicals to see where the crypto market is at!

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Disclaimer*

I am not a financial advisor. The content is for informational purposes only. You should not construe such information or other material as legal, tax, investment, financial, or other advice. Nothing in this report constitutes a solicitation, recommendation, endorsement, or offer by any entity to buy or sell any securities or other financial instruments in this or any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.

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Bitcoin

After hitting a new all-time high this March 2024 at around 73k, Bitcoin proceeded to consolidate in a parallel channel. While it is currently making a series of lower highs and lows, down-sloping parallel channels after an up move tend to be bullish and break out to the upside. A breakout from this range could be what takes Bitcoin to 100k and beyond. The question is when? 

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In the meantime, it is possible to simply trade the range. For traders, it is generally recommended to buy on the lows of a range and sell/short on the highs. Longer-term investors can also accumulate on the lows of the range. 

In terms of horizontal supports and resistances, there is a lot of demand around the $58,740.00 level (2021 monthly close) and a lot of supply around the $69,000 level (2021 all-time high). As of this writing, Bitcoin is testing the $58,740.00 support again. Holding this level would be bullish for Bitcoin. 

It is important to remember that the market isn’t static and that price tends to wick beyond key levels. This can confuse and shakeout many beginning traders out of their positions. A good way to avoid this would be to have one’s own method of confirmation. Confirmation signals the price is moving in a direction and is not simply a fakeout. Many experienced traders require the price to close beyond a level, rather than simply wicking through it, to confirm a breakout. Some even require 2 candle closes. For example, the recent low of Bitcoin around $49,000.00 did wick past the support of the channel. Many considered this to be a breakdown leading to panic selling and shorting. However, the next day, the price closed back above the channel, giving a good buying opportunity instead. 

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Another way to trade Bitcoin is to use Fibonacci retracement levels. Fibonacci levels are derived from the Fibonacci sequence, a series of numbers where each number is the sum of the two preceding ones (e.g., 0, 1, 1, 2, 3, 5, 8, etc.). These numbers occur naturally in nature, and work in Technical Analysis as well. They can act as both supports and resistances. 

Using the Fibonacci retracement tool and tracing it from our local bottom to top, we can see that Bitcoin is generally hovering above the 0.236 Fibonacci level. This is indicative of a strong uptrend. The one time it fell below 0.236, it went for the next level at 0.382 and bounced from there. Currently, BTC is testing the 0.236 level again as support. 

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Ethereum

Most other altcoins have been decisively weaker than Bitcoin. Ethereum, for example, has already broken down from its parallel channel and even retested its lower end as resistance. It is currently ranging between the $2150.00 and $2770.00 area. For more upside, ETH would have to break back above $2770.00 It could then target the middle of the channel or the $3670.00 level. 

Bitcoin Dominance 

The weakness of altcoins is also reflected by Bitcoin Dominance (BTC.D). This chart reflects the amount of money flowing into BTC vs. other cryptocurrencies. For example, if BTC.D is rising, investors are putting more money into BTC, whereas when it is falling, investors are putting more money into other cryptocurrencies. Ever since March 2023, BTC.D has been trending up. Its next resistance is around 58%. With BTC.D continuing to rise, it may not be time for alt season just yet, so investors should remain cautious. However, it is also possible for altcoins to rise with Bitcoin dominance going up so long as BTC does the same. As always, it is important to keep an eye on Bitcoin!

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On-Chain Metrics

On-Chain Metrics also show that the number of transactions on Bitcoin has been steadily increasing. This can indicate that the network is being used more often and can be taken as a bullish signal. 

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On the other hand, data also shows that the number of new Bitcoin addresses is in a downtrend. This can mean that while the network is being used more, it may just be the same people using it and that Bitcoin adoption has been stagnating. A lower number of new Bitcoin addresses can be taken as a sign of caution. 

Afterword 

Although the cryptocurrency market offers many opportunities to make money, it also offers many chances to lose it. As responsible traders and investors, we should only risk what we can afford to lose. Moreover, it is important to always do our own research and not just follow advice from friends or financial influencers. We can’t always expect the markets to go our way. Nevertheless, continuing to practice and learn technical analysis can eventually yield better results. Keep trading and try to make the best of the markets!