Bearish view
- Sell the BTC/USD pair and set a take-profit at 18,500.
- Add a stop-loss at 20,000.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 19,700 and a take-profit at 21,000.
- Add a stop-loss at 18,500.
Bitcoin price remained in a consolidation phase as investors waited for the next catalyst. The BTC/USD was trading at 19,200, where it has remained in the past few weeks. This price is slightly above last week’s low of 18,700.
Bitcoin consolidation continues
Bitcoin continued diverging with other assets like bonds and stocks. It has remained in a consolidation phase even as American stocks continued rebounding.
The Dow Jones and S&P 500 index rose by more than 2.3% on Friday as the earnings season continued. Futures tied to the index have also pointed upwards on Monday. Historically, Bitcoin has had a positive correlation with these indices.
Meanwhile, Bitcoin consolidated as it diverged with the US dollar index. After rising to a 20-year high of over $115, the US dollar index retreated to about $112 after the relatively weak housing data from the US. The dollar also retreated as currencies like the euro and pound rose after Lizz Truss resignation.
Market data shows that Bitcoin volatility has dropped sharply in the past few weeks. The 30-day realized volatility has dropped to 52%, which is the lowest level in months. Another volatility gauge known as BitVol has dropped to 69.2, which is much lower than its May high of 111.
At the same time, Bitcoin trading volume has plunged in the past few weeks. Data compiled by Coinbase shows that the average daily trading volume has crashed from over $100 billion in January to $47 billion.
As such, a combination of low volatility and low volume can spell trouble for Bitcoin prices, which is often rife with speculators. A good example is what happened in 2018 when Bitcoin slipped to $3,000 after going sideways at around $6,000 for a while.
However, some analysts believe that Bitcoin's consolidation could be a sign that smart money investors are buying the dip in small chunks for a while.
BTC/USD forecast
The BTC/USD pair remained in a consolidation phase during the weekend. It made a good recovery after falling to a low of 18,662 last Friday. The pair is consolidating at the standard pivot point and at the 25-day moving average. At the same time, the Relative Strength Index (RSI) moved to the neutral level at 50.
The pair will likely hold at the current level in the coming days. The key support and resistance levels at 18,500 and 20,000.
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