Bitcoin Scraping the Bottom of Long Term Wedge

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  • Bitcoin is testing support of a long term wedge which should be resolved this week
  • The alt market cap has pulled back a bit, but Bitcoin dominance is still dropping
  • New wave of coronavirus could shock all markets

Bitcoin continues to range within a long term wedge, with no clear signs offered as to its next direction. With a potential second wave of coronavirus worrying the markets, we could be in for a tumultuous time, and Bitcoin will likely be impacted just the same as traditional markets. This would also impact the alt coin market, which is itself showing signs of running out of steam, although maybe just in the short term.

Bitcoin Stuck in a Wedge

Bitcoin continues to edge itself toward the end point of its long term wedge, and is currently testing the support offered by it:

Bitcoin price chart 1

As we can see, this wedge should resolve itself within the next two weeks at most, and the odds of a return to the $8,000s have been strengthened by the lack of bullish momentum shown in the past week. If Bitcoin were to fall down through the wedge then we are looking at the $8,800 region and the $7,600 region as support levels, with a return to the 200-day Moving Average a tempting target:

Bitcoin price chart 2

Of course this period of downside could be a simple regathering of strength before a push above $10,000, but with the previous attempts having failed, we would need to see a sustained push to the $10,300 level to conclusively believe that we are ready for the next market cycle.

Some have suggested that Bitcoin is once again becoming correlated with the stock market, which has finally seen its stunning recovery halted this month. If this is the case, and we are on the verge of a second wave of the coronavirus that hits stock market confidence, Bitcoin’s future could be taken out of its hands.

Alt Market Looking a Little Leggy

The alt market continues to look promising in some ways, with coins like ONT and ONG enjoying fine ends to the week, but in other ways it looks like it might be about to get a bit of a breather. For the alt run to continue further we would need to see the Bitcoin dominance continue to fall, and certainly not reclaim the level it has just lost:

Bitcoin dominance 3

Bitcoin’s drop to the bottom of the wedge has seen the alt market cap shrink back from its $92 billion mark which is not something we really want to see, although this too could just be a small reset before a further kick on:

Crypto market cap 4

With Bitcoin in limbo and potentially set to lose some momentum, we could see a continuation of the alt run that has been a feature of the past few weeks. There is however a new sense of uncertainty in all markets due to coronavirus, and that never bodes well for price in any asset class, at least in the short term.