Sideways Trend and Support Levels in the Crypto Market
The crypto market, including prominent cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH), has entered a sideways trend. Bitcoin’s price, in particular, has struggled to maintain support above $26,000 after facing rejection from highs above $25,000. This lack of clear direction in the market can be attributed to low liquidity and a lack of interest from retail investors who fear further declines below the crucial $25,000 support level.
Bullish Outlook and Technical Analysis
Despite the current market structure being weak, there is a potential bullish breakout on the horizon. A rectangle pattern has formed on the daily chart, suggesting a possible breakout towards $37,746. However, to strengthen the market structure, another minor decline to confirm support at $25,000 and gather liquidity may be necessary before the breakout occurs. The 200-week Exponential Moving Average (EMA) at $56,606 is expected to absorb selling pressure and limit the downward movement below $25,000.
Conflicting Views and Historical Patterns
Analysts and traders have differing opinions on the future direction of Bitcoin. Some believe that Bitcoin is positioned for a weekly close above $26,000, while others anticipate a potential upside wick beyond the Lower High resistance, similar to the October rally in 2019. Historically, October has been a positive month for Bitcoin, and there are similarities between 2019 and 2023 that suggest a potential 10% rally to $29,200.
However, a sustained movement below the primary support at $25,000 could damage the anticipated bull market, leading to panic selling and a potential sell-off to $20,000 before a significant recovery takes place.