This Market Analysis is brought to you by OKEx, for more insights visit their blog.
Even before the April breakout of Bitcoin (BTC), derivative Bitcoin markets saw strong volume during the month of March. According to CryptoCompare’s most recent exchange review, OKEx exchange traded $1.5 billion in average daily bitcoin derivative volume.
The above exchanges all benefit from being registered in more crypto-friendly jurisdictions and thus have fewer KYC requirements than more institution-focussed exchanges offering Bitcoin futures. The CME, a US registered exchange, offers such a highly regulated Bitcoin product – but the trading volume on this exchange is paltry (about $70 million daily) compared to OKEx, bitFlyer, and BitMEX, owing to the difficulty involved in being approved to trade on such platforms.
Bitcoin Market Outlook
Continuous retests (below, purple circles) of Bitcoin’s key $5,350 resistance zone seem to confirm the presence of an ascending triangle, a bullish pattern. There has not been sufficient volume, however, to punch through this key level.
This pattern still has all of April to play out. A retest of the bottom regions of the pattern, at $5,100 and above, would be normal and even likely after repeated small rejections during the latest attempt up. Volume was so weak on these movements that they could hardly even be called attempts.
On the other hand, some chartists are recognizing the presence of a symmetrical triangle rather than an ascending triangle, with the top pole located at the top of the April 10 false breakout.
While these patterns are similar in that they are consolidating patterns, the former one is not inherently considered bullish whereas the latter one is.
Indeed, the price has been contained – barely – within this symmetrical triangle range. Bitcoin is currently on a downward leg within this structure and approaching key support at $5,180. This level marks the rough midpoint of the structure, and also the first regions of the rising support trend band (in green, below). Traders should watch the volume in the next few days, which may give clues as to BTC’s breakout direction.
Both of these consolidation patterns transpire toward the end of April, and in either case a long term bullish bias is suggested. We can say this because of Bitcoin’s dogged refusal to drop below $5,000, which is an impressive feat given the strength of the shocking April 2 breakout. A deeper retrace could have easily been accommodated without worry, anywhere above $4,500-600.
What’s more, a Golden Cross is impending within a matter of days – two or three – which is commonly thought of as a very bullish long term signal. However, seeing as this event has been priced into the market for a while already, it may not mean positive price action in the short or even medium term. A breakdown after a Golden Cross would not be impossible, especially if it were a temporary one.
