Is $10,000 really a magic number for Bitcoin? Do traders care if it trades above or below this mark? It certainly seems so.
Bitcoin is trapped in an extremely narrow trading range as we head into the U.S session, following another minor bounce from just above the $10,000 support level. With Bitcoin close to posting thirty consecutive daily prices above the $10,000 level, we thought it may be a good time at look at this key psychological barrier and what it may mean for Bitcoin going forward.
Bitcoin first hit $10,000 on November 29th, 2017 and performed its first official daily price close above the $10,000 barrier some two-days later. The bullish daily price close above the $10,000 sparked a buying frenzy, which caused Bitcoin to rally by nearly 90 percent in just fifteen days.
The #1 cryptocurrency subsequently retraced all of its gains and tested the $10,000 level on January 17th, 2018 and performed a bearish daily price close under the $10,000 level just four-days later, which caused Bitcoin to plummet by around 40 percent.
This brief description of the psychological importance of the $10,000 mark clearly underscores the importance of the battle that is currently unfolding for medium-term BTC/USD control.
Current Bitcoin Technical Analysis
As far as drawing conclusions from current conditions, the fact that price has traded for nearly thirty consecutive days above the $10,000 level is certainly a positive development. Furthermore, dip-buying has also been extremely robust once the price of Bitcoin has dipped under the $10,000 level.
A number of key technicals certainly suggests that a bearish drop may be coming for the BTC/USD pair, however, daily price closes around the $10,000 are without question extremely important to cryptocurrency market participants.
In conclusion, the ability or inability for buyers to hold price above the $10,000 level will become a determining factor for the overall medium-term direction of the BTC/USD pair going forward.
*Periods of extended low volatility in Bitcoin are usually followed by sudden and powerful technical breakouts.*Nathan Batchelor, SIMETRI Research Bitcoin Analyst
SENTIMENT
Intraday bullish sentiment for Bitcon has improved slightly, to 30.00%, according to data from TheTIE.io – while the long-term sentiment indicator has slipped back, to 68.80 % positive.
UPSIDE POTENTIAL
Bitcoin’s 50-period moving average on the four-hour time frame is currently capping any upside moves around the $10,250 level, with the 200-period moving average the foremost near-term resistance below the current weekly-high, at $10,550.
Bulls need to override the bearish head and shoulders pattern in play on the four-hour time frame, and take-out the $11,000 level to enable a blockbuster rally towards the $11,700 level.
DOWNSIDE POTENTIAL
In theme with this article, multiple-daily price closes under the $10,000 level will open the downside up for Bitcoin and encourage traders to increase short positions. Key near-term technical support is found at the $10,020 level, while the $9,900 level is key below the $10,000 level.
The July monthly low and the cryptocurrencies 21-day EMA are converging around the $9,100 level, and form without question the most important technical area below the $9,450 level.
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