KuCoin Weekly Technical Overview: Is This the End of Consolidation for Bitcoin?


The cryptocurrency market has been in an impressive bull run in the past month or so. The buyers in the market have maintained support levels firmly and have cleared through the resistance areas along the way up. A little to no reaction from the bears at the key resistance levels evidently proves the demand for crypto growing dramatically.

When the entire crypto market crashed in the second quarter of 2021, the sentiment around the public went in splits. Some stood bullish, expecting a V-shape or W-shape recovery, while some still stood bearish expecting the market to get into a downtrend making lower lows and lower highs. In hindsight, the former analysis and anticipation seem to have played out as the buyers continued to raise the prices higher every step of the way. Of course, the consolidation, especially in Bitcoin, lasted for about three months, but the fact that the demand zone was left unbroken depicted strong signs of buyer's existence in the market.

On the altcoin front, the trajectory of most altcoins was not in sync with Bitcoin, but the overall movement was indeed in correlation. During the entire recovery phase, altcoins got divided into all types of trends. Few altcoins are skyrocketing and even breaking above their ATH; some are simply following the price action of Bitcoin, while the rest have still not reached their recovery stage.

Bitcoin Tests the $50,000 Resistance Level

The volatility in Bitcoin has dropped in the last couple of weeks, as the consolidation around the $50,000 mark is slightly overextending. The sellers at a potential resistance around this level are attempting to push the market to the downside, but the buyers are gobbling up the discounts, not letting the price drop any further. Yet, the short-term bulls are failing to breach above the psychological barrier of $50,000. However, with the market testing the $50k mark only once, it becomes uncertain to predict the selling pressure at this level.

Profit-Taking Kicks Into Bitcoin?

The optimism in Bitcoin is finally back, with the price inches higher and higher every week. Since May, the range-bound market had evidently put the entire crypto investment space to a halt, as the percentage returns in the short term did not exceed over 10%. However, as the resistance at $40,000 began to weaken with time, the fear started to fade and greed to kick in. As a consequence of excessive demand despite the existence of supply areas at higher prices, the prices rose, breaking through the major resistance and supply zones.

Technically speaking, the $40,000 price level was critical in the market as it was being shot back despite the buyers coming up strong from the $30,000 support level. The price breaching above the $40k was crucial because the bears at this level could potentially lead the market to a downtrend if the buyers had not stepped up for higher prices. And the buyers gearing at the same support areas and eventually breaking through the support levels proved the existence of those buyers who took the prices all the way up to the $60k previously.

As it can be observed from the below-illustrated candlestick chart of BTC against USDT, the prices have been trending north for the last five weeks with a minimal retracement to the downside. But if we closely look at the three recent bullish (green) candles, it can be ascertained that the length of the candles is mildly getting shorter as the price is approaching the all-time highs. This could simply mean the loss of momentum of the buyers, but if the same period were checked on a higher timeframe, the bulls would certainly look strong enough. Thus, we base it on the overall trend momentum in such cases, which clearly favors the buyers.

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Bitcoin Price Chart on the Weekly Timeframe | Source - BTC/USDT

Conclusion

The market is in a situation where one must approach it with the popular mantra – “A trend is your friend.” The Bitcoin market has yet again proved to stand with the statement despite the fundamental barriers around it.

Every trending market must go through a retracement. The period of the retracement is no significant factor that determines the strength of the trend. Instead, it is the momentum of the buyers and sellers within the retracement that determines the period of retracement and the future price action.

Currently, Bitcoin is struggling to push and breach above the resistance level at $49,300 level due to the dominance of the bears in these areas. However, the buyers not allowing the sellers to make a sequence of lower lows and lower highs clearly shows the compelling interest of the bulls as well. To sum up, the consolidation could last a little longer until the sellers at the technical resistance levels are completely faded away.

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As People's Exchange, KuCoin is favored by 8 million global users for various tradable assets, a friendly user experience, and reliable support. It raised $20 million in round A funding from IDG Capital and Matrix Partners in November 2018.

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