Bitcoin has remained well within its range bound channel for another day despite heavy losses for many of the DeFi related tokens.
Analysts and investors have had few insights as to the next direction Bitcoin will take but the longer the consolidation continues, the larger that move is likely to be.
Bitcoin’s current trading range, which has been holding for the past five weeks, is between $10,200 and $11,200 and until it breaks out of this the next direction will remain unclear.
No Impact From Negative News
There has been a slew of negative news for Bitcoin and general markets recently and it has become clear that, for the past few months at least, the asset’s movements have been correlated with stock markets.
U.S. President Trump’s catching Covid-19, then getting a fast track cure and kyboshing further discussions on stimulus measures caused Bitcoin to blip, but nothing more. On-chain analytics provider Santiment has noted that the last leg down may have formed a local bottom and BTC has been climbing ever since.
🤔 Did #Trump's ambiguous update about the #stimulus package signal the local bottom for #Bitcoin? According to our data, $BTC bounced off of $10.55k & has gradually climbed since this announcement that spiked stimulus discussion on #crypto platforms. https://t.co/jgEwCY7YDH pic.twitter.com/aV3QRClqKm
— Santiment (@santimentfeed) October 8, 2020
At the time of writing the king of crypto had reached an intraday high of $10,670 before retreating slightly to the $10,600 zone as the sideways chop continues.
Bitcoin and The Bigger Picture
Founding partner at Bitazu Capital, Mohit Sorout, suggested that the next breakout when it comes will determine the direction of Bitcoin markets for several weeks to come which could even take us to the end of the year.
— Mohit Sorout 📈 (@singhsoro) October 7, 2020
CoinGape also recently reported that there has been significant interest in China which is also bullish for Bitcoin.
Meanwhile, derivatives trader and analyst ‘Cantering Clark’ said that the recent DeFi boom was insignificant compared to what will happen when Bitcoin goes on its next run.
“This DeFi run was a scrimmage compared to what will happen to the small-cap stuff when $BTC finishes its next run. People came in recently but we are mainly trading against each other still. Imagine what new uneducated retail FOMO coming in will do.”
There are still a number of fractals in play that are suggesting there will be a significant dump before any sustained rally. A break lower from here could take BTC back to monthly support at $9,300.
Looking further ahead, one analyst has been delving into Volume Weighted Average Price anchored to all-time highs, adding that monthly closes above this indicator resulted in a bull run.
Volume Weighted Average Price anchored to ATH's.
In the past two cycles, when there were two monthly closes above the AVWAP and a successful retest of it as support, a bull run was confirmed and continued.
Note: Grey vertical line = halving. pic.twitter.com/PztTqn2A1p
— Nunya Bizniz (@Pladizow) October 7, 2020
Either way, a larger move is imminent and downwards appears to be the path of least resistance in the short term.