Bitcoin, which has been experiencing very low volatility over the last several weeks, may soon break out of its malaise, according to a handful of market observers.
The digital currency “has been in an extended consolidation pattern since early January,” said Jon Pearlstone, publisher of the newsletter CryptoPatterns.
However, “The current tight price range is a sign of trader indecision which often leads to high volatility when the consolidation ends.”
Bitcoin has been “struggling to hold the key $3500 level,” he noted, emphasizing that the sharp decline the cryptocurrency experienced yesterday could have signaled that “bigger move is coming soon.”
Mati Greenspan, senior market analyst for social trading platform eToro, noted that while it is “possible” the cryptocurrency is headed for a notable price gain, his technical analysis pointed to potential downside.
He specifically referenced a pattern called the descending triangle, which frequently materializes during downtrends.
“If we draw our support line at $3,000 then draw a descending resistance from the 2017 highs until today, you’ll see a grand descending wedge,” he stated.
Over the past year and a half, this descending triangle pattern has shown up repeatedly, noted Greenspan. In that time, six of these bearish formations have materialized, with four of them resulting in bearish breakouts.