- Bitcoin is back in its six-week channel after Asia sold off on Monday morning
- A potential higher high and higher low has formed on a lower timeframe
- The total market cap needs to get over $1 trillion for the market to have any kind of confidence
Bitcoin is back in the channel it has occupied since mid-June after what looked like a breakout turned out to be a fakeout and Asian traders sold heavily. However, there could be potential for a more concrete breakout if prior resistance can act as support in the next day or two, but the bigger goal is getting the total market cap over $1 trillion.
Bitcoin Back Inside
Bitcoin first appeared in the channel in mid-June after the Terra collapse and jitters over Three Arrows Capital. With those fears having receded, the market looked primed for a bear market bounce, and towards the end of last week things looked promising. However, the momentum fizzled out and this morning Bitcoin reverted to type:
The price action has left us with a very clear downtrend in the short term:
There is of course nothing to stop Bitcoin dropping all the way down to the bottom of the channel, although there may be some hope for a temporary respite if Bitcoin can turn prior resistance into support at this point:
It could be argued that if the Bitcoin price can stabilise in this area then it could represent a higher high and a higher low, but that might be a little too much stretching of the narrative. Nevertheless, if price can stabilise here then it gives hope of further upward movement later in the coming days.
$1 Trillion Barrier is Key
As we pointed out last week, the rejection should not have been a surprise given that there was still plenty of money waiting on the sidelines to get in, with the total market value needing to break and hold above $1 trillion in order to remain bullish in the short term. As it was, the rejection was textbook:
Until the market cap can pass this point, any trades underneath it are essentially gambles and it’s not worth risking your capital on it – save it for capitulation or more concrete possibilities.