The flagship cryptocurrency is consolidating between $8,800 and $10,080 since late April without giving any clear signs of where it is headed next.
One of the most prominent analysts in the industry maintains that Bitcoin’s inability to move past the $10,000 resistance level adds credence to a sudden bearish impulse that could see it plummet to $6,300.
Nonetheless, others believe that the pioneer cryptocurrency shows a textbook technical pattern, dubbed falling wedge, that may see it rise towards $11,500.
Regardless of the ambiguous outlook, different on-chain metrics suggest that a significant price movement is underway.
Bitcoin Is Poised for Wild Price Action
Santiment, a behavior analytics platform, noted in a tweet that Bitcoin could benefit the most from the next major inflow of capital in the market. The firm argues that its “Twitter Sentiment Volume Consumed” index shows that BTC is hovering at a neutral territory, which can be interpreted as a positive sign.
“Historically, prices rise most notably when the crowd turns negative, and vice-versa when the crowd turns positive,” said Santiment.
Bitcoin’s Twitter Sentiment Volume Consumed. (Source: Santiment)
Indeed, Bitcoin’s lackluster is igniting a new wave of bearish views around it. For instance, Whale Alert recently reported the movement of 3,000 BTC, equivalent to over $28 million, transferred from an unknown wallet to Hong Kong-based cryptocurrency exchange Bitfinex.
3,000 #BTC (28,414,167 USD) transferred from unknown wallet to #Bitfinex
Tx: https://t.co/xXuGEica77
— Whale Alert (@whale_alert) May 29, 2020
The transaction was seen by many market participants as a very negative sign, with some of them commenting: ”Short Time!!!,” “Dump it!,” “We gon die!.”
From a counter-sentiment perspective, the pessimistic opinions expressed in regards to the transaction reported by Whale Alert can be as a bullish sign, affirmed Santiment. Since the wisdom of the crowd is usually inaccurate, betting against it can be a profitable strategy.
Strong Support, Weak Resistance
IntoTheBlock’s “In/Out of the Money Around Price” (IOMAP) model also shows that from an on-chain perspective, Bitcoin can climb higher.
The IOMAP cohorts show that the bellwether cryptocurrency is sitting on top of a significant supply barrier between $9,270 and $9,560 that may prevent it from a sudden decline. Here, approximately 1.6 million addresses bought nearly 1.2 million BTC.
In/Out of the Money Around Price. (Source: IntoTheBlock)
If this supply wall can hold, the bulls would need to push Bitcoin above the overhead resistance for the uptrend to resume. Breaking above the $9,580-$9,850 level where 869,000 addresses purchased 606,000 BTC, leaves Bitcoin open for a rally towards the next significant level of resistance around $11,500.
With such a bright future, it is crucial to implement a robust risk management strategy when trading Bitcoin to avoid getting caught up on the wrong side of the trend.