Thanks to a rally before the close for stocks last Friday, the cryptocurrency market went into the weekend with a positive enough of a sentiment to sustain Bitcoin above $29,000. Unsurprisingly, we got a relatively unexciting weekend as the price of BTC is clearly just consolidating in a tight range between $29,000 and $31,000.
The last two weeks have actually been fairly reassuring for most crypto traders, as sideways action at a strong support zone is not too shabby when compared to the continued downtrend of equities.
While it may be true that the majority of the crypto market is correlated to Bitcoin, and Bitcoin is tightly correlated to the Nasdaq 100, Bitcoin gets 17.5 hours every day where it has the chance to decouple from equities.
In fact, Bitcoin has been actively gaining in underlying momentum ever since it reached oversold levels on 5/11. The RealMotion indicator reveals a confluence point between price and momentum that may end up being a short-term bottom.
We typically use two RealMotion indicators: the 10/50 moving averages are used to measure short-term momentum, and 50/200 for long-term momentum. Heres how they currently stack up for Bitcoin:
You can see that there hasn’t been a major confluence in which price, short-term and long-term momentum have all gotten significantly oversold since late January. The same happened about two weeks ago, and we haven’t seen any real degradation since.
With both long and short-term RealMotion indicators showing a continued gain in momentum since Bitcoin’s recent range low, it appears that there may be hope for a short-term rally. When similar conditions occurred in January, BTC mean reverted and rallied +46% over the next 3 months.
A significant selloff on May 11th was followed by a blowoff bottom or a bullish pin bar on the 12th.
Optimistic traders and cryptocurrency investors may be interested to trade a breakout of this current consolidation range, but keep in mind the looming weight of geopolitical strains.
The one thing thats clear is that a breakout is imminent for Bitcoin, its just a matter of whether it will break down or rally back up.
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