The price of Bitcoin (BTC) has seen a great week with a surge to $11,700. After two months of consolidating inside a range, the price of Bitcoin finally broke through the psychological barrier of $10,000 and currently faces the final hurdle before the bull market can start.
Most often, people become bullish once they see green candles, with which extraordinary targets can be found on social media. Can these be justified or is a cool-down period more likely in the near term?
Cryptocurrency market daily snapshot 1/8/2020. Source: Coin360
Bitcoin closes one-year-old CME gap and faces significant resistance
As Bitcoin’s price broke through the barrier of $10,000, the next significant resistance zone became the $11,500-11,800 area. Since BTC was range-bound for two months, the breakout ended up being a very volatile move as anticipated, going up by $1,500 after this breakout finally happened.
BTC/USD 1-day chart. Source: TradingView
Given that the price of Bitcoin surged this fast in such a short period of time, it’s not likely that the price of Bitcoin breaks through the resistance zone in one-go.
The $11,500-11,800 resistance area is an ancient and substantial area on the charts. Not only did this level serve as resistance throughout the summer of 2019, but it also acted as resistance during the peak mania of December 2017.
Therefore, this is essentially the last massive level for resistance. If the price of Bitcoin breaks through this zone, then there is a lot of open range above and a new bull market will be upon us.
BTC/USD 1-day chart. Source: TradingView
Interestingly, the majority of the CME Bitcoin futures gaps get filled. However, they don’t necessarily get filled immediately as today has shown. The chart above, for example, is showing a gap at $11,700 from August 2019 that just got filled.
What’s next? The chart is showing a clear gap in the $9,700-10,000 area, unfilled. The likelihood of this gap to be filled starts to increase with the current upward momentum, making a retrace toward the $9,800 area more likely with each day.
The $11,300-11,400 barrier is crucial on lower timeframes
BTC/USD 1-hour chart. Source: TradingView
The 1-hour chart is showing a clear uptrend and holding the previous resistance zone at $11,400 is crucial for the bulls.
An example can be seen in the previous resistance zone. Bitcoin’s price couldn’t break through the $11,200 level for a few days, but after three tests, the breakthrough occurred. Immediately after, the price confirmed the previous resistance zone as a support level and continued the rally.
An identical approach is required for the $11,400 level. If that level holds for support, more continuation is expected toward $12,000. If the level is lost, a further correction towards $10,800 or lower becomes very possible.
Total crypto market cap faces resistance too
Total market capitalization cryptocurrency 1-day chart. Source: TradingView
The total market capitalization broke through the crucial barrier of $270 billion and immediately flipped that level into support. This support/resistance flip was the start of an even more significant surge, as the total market cap touched the $350 billion level.
However, is further continuation warranted? Very unlikely, given the immense expansion of the past two weeks. A reasonable approach would be a test of the previous resistance as a new support level at around $285 billion.
The bullish scenario for Bitcoin
BTC/USD 1-day bullish scenario chart. Source: TradingView
The bullish scenario depends on the crucial threshold of $11,300-11,400 as the pivot to hold for the price of Bitcoin.
A bullish breakout would preferably see the price of Bitcoin clear the $11,500-11,700 resistance zone and flip that area for support. As stated previously, this is the final significant hurdle. If Bitcoin’s price breaks through the resistance zone and conquers this level, further upward momentum can be expected.
The levels to watch if Bitcoin breaks through this resistance are primarily the next resistance zones found between $15,000-17,000.
The bearish scenario for Bitcoin
BTC/USD 1-day bearish scenario chart. Source: TradingView
However, is such a breakout likely to occur after the recent expansion? It seems very unreasonable to break through a resistance zone of such significance in one try.
A more reasonable approach is a renewed range-bound construction, just like the previous months have been. The green zone between $9,700-10,000 is crucial to hold. If that area flips for support (after rejecting the $11,500-11,800 area), a new range is defined, and the price of Bitcoin can then move sideways for several months.
This range-bound construction would also line up with the 100-day and 200-day moving averages (MAs) as these are still below the spot price. As long as this remains unchanged, the BTC price is in bull territory.
What about altcoins?
Once Bitcoin starts to consolidate and correct, major altcoins will most likely do the same, and then the money will flow from the majors and Bitcoin toward the smaller cap coins and tokens. In other words, the current “altseason” may still have a lot more room to run.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Bitcoin Market Price Chart in RealTime