When Bitcoin rallied to $14,000 in June, some cryptocurrency fanatics believed that it was simply a matter of time before the world’s largest digital asset eclipsed its all-time high of $20,000.
However, three months later, and this simply wasn’t the case, with Bitcoin instead playing out a rugged consolidation pattern that has seen price stay above $9,350 and below $13,000.
If Bitcoin was to break out of the $20,000 range, it would reenter a period of price discovery, which is historically when cryptocurrency surges to unexpected heights.
But this scenario still seems quite far off, even for the most bullish of Bitcoin bulls.
Bitcoin needs to break sequence of lower highs
Since hitting $14,000 in June, Bitcoin has made four consecutive lower highs. This is exactly the same as in 2018 when price began to dwindle from $20,000. For Bitcoin to truly reenter a bullish posture, it needs to close a daily candle above $12,400 and $14,000.
While the three-month consolidation pattern around $10,000 is considered by many as bullish, it needs to be said that while lower highs keep being made, there is no conceivable way to be bullish about Bitcoin in the short-term until a new high is made.
Retail interest needs to return
Coin Rivet reported on an apparent lack of retail interest in Bitcoin last month. This was exemplified by a big drop in Google searches for Bitcoin in comparison to 2017.
It was also noted that institutional investment was on the rise, with the likes of Grayscale and Fidelity both massively increasing their digital assets under management.
But for truly exponential growth, the cryptocurrency space needs a new wave of retail investors to arrive, as seen in 2017.
While there is scope for the market cap of cryptocurrencies to increase through institutions alone, true growth (wherein Litecoin rallied by 500% in one day) only happens when retail interest is piqued.
Aside from breaking the sequence of lower highs, Bitcoin needs to break out of the ongoing volume profile that is dwindling significantly.
Since June, volume has consistently been dropping off. However, this usually means that a spike in volatility is just weeks or months away, potentially around the time of Bakkt’s Bitcoin futures launch.
It’s worth noting that if the psychological level of $10,000 fails to hold, the fragile support at $9,350 will be tested once again. If this breaks, price targets could begin to emerge at the daily 200 EMA at $8,500, the weekly 50 EMA at $7,650, and potentially the historic level of $6,750.
While this might be a doom and gloom scenario for Bitcoin bulls, a test of these critical moving averages coupled with a successful launch of Bakkt and increased retail investment could well serve as the ultimate platform for an upcoming bull market.
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