The past few weeks have seen Bitcoin tread on thin ice multiple times: every time the cryptocurrency rallied to $10,000, it snapped lower, often violently.
This week’s attempt at the crucial $10,000 resistance was no exception: after temporarily trading above the level for all of 20 minutes, the asset began a precipitous decline.
Just 24 hours after $10,000 was tapped, Bitcoin was trading at $9,050 — almost 10% below the high.
Yet a top analyst says that as long as BTC doesn’t move much lower from here, the chances of “bullish continuation” on a medium-term time frame are rather high.
Bitcoin Must Hold This Crucial Level to Cement Uptrend: Analyst
A cryptocurrency trader, part of the team at industry research firm MarketsScience, recently shared the chart below.
Acknowledging the recent drop into the low-$9,000s, he wrote that Bitcoin is currently trading between the monthly and weekly open prices, stuck in a tight range.
Although he didn’t have anything to say about the significance of that, he shared that Bitcoin’s ability to hold $8,700 for multiple weeks on end makes it “look like [BTC will see] bullish continuation.”
Should it fail to hold that level, he explained, the “bullish continuation” thesis will become “invalidated.”
Other analysts agree that Bitcoin is currently in an uptrend.
As reported by Bitcoinist previously, a top trader, who predicted that Bitcoin would bottom 2018’s bear market at $3,200 months before it did, identify four signs BTC is still bullish:
- BTC is trading above the downtrend that formed during 2019’s $14,000 high.
- Volume is contracting within a range, suggesting an imminent breakout.
- The recent price action looks like the middle of 2019’s rally.
- BTC has printed a series of higher lows and higher highs.
Related Reading: Bitcoin Bull Case Strengthens as U.S. National Debt Rockets to $26 Trillion
Losing $8,700 Could Lead to 30% Drop
The importance of $8,700 cannot be understated, the trader who shared the first chart seen above later explained.
He shared the chart below illustrating that under $8,700, there is likely a lack of liquidity that will result in a rapid drop:
“If price was to close below 8700, this gap would likely fill in a high volatility quick move,” he wrote, pointing to the low-$6,000s as a likely place at which said “quick move” could bottom.
Losing $8,700 would also bring Bitcoin under a block of buy orders on Bitfinex.
A top trader recently shared a chart of Bitcoin’s recent price action on Bitfinex and the Order Book Dominance Bands indicator. The OB Dominance Bands is effectively a heatmap showing where (at what price) there is either buy-side or sell-side demand for BTC — the thicker the bands, the more demand there is.
The chart shows that there is a clear confluence of demand for Bitcoin between $8,600 to $9,000.
Featured Image from Shutterstock Price tags: xbtusd, btcusd, btcusdt Analyst: If Bitcoin Holds $8,700, the Chances of "Bullish Continuation" Are High