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Fan Yang

Bitcoin (BTC/USD in a Tight Range Awaiting Breakout; Bullish Bias?

I have not seen Bitcoin (BTC/USD) in such a quiet mode for a long time. Price has been in a $150 range, or a range of less than 2.5% for almost 2 weeks since the “Tether Dump”.

BTC/USD 4H Chart


(click to enlarge)

Tether Dump:

  • Let’s start with that weird looking candle on Oct. 15 where price shot up to $6800 on Coinbase.
  • In fact, it jumped to about $7600 on exchanges that offered Tether (USDT) i.e. Bitfinex, Binance.
  • As traders dumped tether in these exchanges they rotated into Bitcoin causing an elevated demand for bitcoin in these exchanges.
  • As a result Bitcoin rallied sharply and unevenly, but eventually prices stabilized around $6400.
  • On Coinbase, we can see price has settled in roughly the $6345-$6500 range.

Breakout Scenario:

  • When you look back at historic price action, we rarely have such a tight range for more than a couple of weeks.
  • When there were such tight consolidation, they were usually (but not 100% of the time) followed by a rally.
  • So off the bat, there is some bullish bias if we want to refer to historic price action.
  • However, if price breaks below $6340 for example, we can see a dip towards 2018’s common support around $6000.
  • A break above $6500 on the other hand might send Bitcoin to test the $6800 resistance from September, or even the $7400 high from September.
  • A break above $7400 for me officially signals a bullish reversal scenario.
  • Otherwise, if price stays under $7400, we are still in consolidation mode, but may have shifted from a bearish trend to a sideways one.

Below are daily charts from 2016, 2015, and 2014 - I didn’t find any extended narrow range in 2017.

BTC/USD 2016:

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BTC/USD 2015:

BTC/USD 2014:

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