Bitcoin price is holding below $10,000 after the halving as the bullish and bearish scenarios are starting to take shape.
The halving is over, which means that the hype and FOMO around the halving are slowly fainting away. The price of Bitcoin (BTC), the top-ranked cryptocurrency by market capitalization, rallied towards $10,000 pre-halving, but also produced a 15% crash pre-halving.
While the majority expected a drop post-halving to occur, the price rallied from $8,400 to $10,000. What can be expected with the price of Bitcoin in the coming period?
Crypto market daily performance. Source: Coin360
Bitcoin price rallies to $10,000 to close the CME gap post-halving
The price of Bitcoin crashed by $2,000 to $8,100 pre-halving, which created a CME gap over the weekend. While the majority of the investors and traders anticipated a drop to occur post-halving, the opposite happened.
BTC CME Futures 1-day chart. Source: TradingView
The price of Bitcoin rallied post-halving, which immediately led to a close of the CME gap at $10,000. The CME gap marked the top of this post-halving rally defining a clear range for the markets.
BTC USD 1-day chart. Source: TradingView
The structure is clear. Support levels (called the range low) are found between $8,250-8,500, where the price of Bitcoin immediately bounced back. The daily candles closed above $8,500, which show that the interest is definitely in this zone.
The resistance levels are between $9,800-10,100, through which the price of Bitcoin wasn’t able to break.
Everything in between these levels can be defined as the range for the coming period. Given that the hype around the halving is passing by, it can be expected that the volatility of Bitcoin price is also decreased.
Volatility index on Bitcoin. Source: TradingView
The volatility index indicates a high level of volatility recently on Bitcoin. The chart also shows previous examples, where the March crash resulted in an impressive level of volatility for BTC/USD.
Similarly, the recent volatility in Bitcoin is comparable to the volatility during the surge in October 2019. This surge occurred from $7,300 to $10,500 and was caused by news from China.
Usually, this type of volatility slowly drains away afterward, which stabilizes the price. This is reasonable as the price needs to stabilize on a higher level before any new surge. Combining that with the hype around the halving, it wouldn’t be surprising for the price to stabilize in the coming weeks.
Bitcoin stabilized post-halving in 2016 as well
BTC USD 1-day chart. Source: TradingView
The previous halving has many similarities with the current halving. Worth noting, the last halving occurred in a different market, so there are differences to the recent halving. However, markets tend to move in similar cycles due to market and human psychology.
What’s so similar? The halving caused the price of Bitcoin to rally from $425 to $780, after which a 30% crash occurred before the halving. That move is quite similar to the recent halving. The price of Bitcoin broke through $7,700, which caused a marketwide selloff on altcoins and a rise in BTC price to towards $10,000.
However, a few days before the halving, the price crashed while the actual halving event saw little volatility. This is similar to the halving in 2016 when the price of Bitcoin continued to stabilize inside a range for more than a month after the halving as the chart shows.
Why is that? Well, the halving hype went away, and reality kicked in. A final drop occurred, which made the price revert back to the mean.
Total market capitalization holding the 100 & 200MA on the daily timeframe
Total market capitalization 1-day chart. Source: TradingView
Remember how Bitcoin was stabilizing at $6,000 in 2018? Exactly. The price of Bitcoin is currently 58% higher, while the total market capitalization is just above the 2018 support.
This is opening up an opportunity for altcoins. With the Bitcoin halving hype out of the way, altcoins can now follow BTC in its recent rise. What’s more important (aside from flipping the 2018 level for support) is the usage of the 100 and 200-Day moving average (MA) as support.
As long as the total market capitalization remains support on those two moving averages, further upwards surges are likely to occur. Thus, the total market capitalization needs to hold the $225 billion level as a support level.
If this happens, the next levels to target are $300-325 billion. If that breaks, the next resistance is at $360 and $425 billion.
The bullish scenario for Bitcoin
BTC USD bullish scenario chart. Source: TradingView
Can Bitcoin escape this range? Absolutely. The chart above is showing the continuation of the upward trend while expecting massive dropdowns right now is unlikely.
Preferably, for a bullish continuation, the price of Bitcoin needs to hold the $9,000-9,100 level as support. If that happens, and Bitcoin can test the resistance a few more times, the resistance will become weaker.
The more often a level gets tested, the weaker it gets. So, if the price of Bitcoin rallies back to the resistance, it can be expected that we’ll see a continuation to the next target above $10,100, which is $11,400-11,600.
The bearish scenario for Bitcoin
BTC USD bearish scenario chart. Source: TradingView
The bearish scenario isn’t really a bearish scenario. It’s more of a healthy retrace inside a bullish structure. However, it can be classified as bearish in the short-term.
Here, the price of Bitcoin may see one more rally towards $9,800-10,100, which triggers another rejection. If such a move occurs, it can be expected that the price will retrace towards the support of this range, which is the $8,250-8,500 level. That’s not a bad sign and can be interpreted as a healthy retrace.
Overall, the second, bearish scenario may be more likely than a bullish continuation, as the Bitcoin halving is over, and the market is reverting back to equilibrium.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.