Bitcoin prices have been suffering from a distinct malaise lately, trading within a reasonably defined range for several weeks.
Since late May, the digital currency has been stuck mostly between $30,000 and $42,000, CoinDesk figures show.
In spite of this, some market observers have claimed that the digital currency is not only poised to break free of its current range, but could experience some serious upside while doing so.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
Oliver von Landsberg-Sadie, the CEO of payments company BCB Group, spoke to this recently.
“All the on-chain analysis suggests we’re at the tight end of a slingshot,” he told CoinDesk.
“It’s quiet now but don’t mistake that for lack of interest.”
Potentially ‘Explosive’ Gains
Scott Melker, a crypto investor and analyst who is the host of The Wolf Of All Streets Podcast, offered his two cents.
“Bitcoin price has been consolidating in a tight range between 42K and 30K for over 8 weeks, with decreasing volume and volatility,” he noted.
“The longer an asset’s price consolidates, the larger the expected expansion when volume and volatility return. We have seen this countless times with Bitcoin, so the expectation is that the next move will be explosive,” said Melker.
“On-chain analysis indicates that supply is being transferred from impatient speculators to Bitcoin whales with large wallets, with new wallets selling and old, larger wallets buying.”
“This theoretically indicates that the smart money is accumulating ahead of the next major move to the upside.”
Jake Wujastyk, chief market analyst of TrendSpider, provided a differing point of view, stating that:
“I disagree in the short-term. I would argue the tension is currently to the downside as those that are holding Bitcoin need to capitulate to reset the price.”
“The anchored VWAP from the covid lows points to a level of $27k below to watch out for short-term.”
“Based on the historical seasonality, we are entering one of the weakest months of the year next month with only a 20% win rate for August over the last 5 years,” he added.
Jeff Dorman, chief investment officer of asset manager Arca, offered a third perspective.
“Bitcoin is a binary option. It’s either worth close to $0, or it’s worth likely $10 trillion (implying roughly $500k/BTC),” he stated.
“Everything in between is just a path function based on the increased or decreased probabilities and timing of hitting either of these extremes.”
“Earlier this year, those probabilities rose as inflation talk was rising, corporate treasurers were buying, and Elon Musk gave retail traders confidence,” said Dorman.
“Over the past three months, those probabilities fell as Elon pulled out, ESG fears sprang up, and China cracked down,” he stated.
“Traders can use any mumbo-jumbo they want about ‘tension’ and ‘breakouts,’ but the reality is it is meaningless compared to how you assess probabilities.”
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether and EOS.