Bitcoin (BTC) has bought a little more time in its consolidation range, it seems, after being supported at the bottom of this ever-shrinking zone. The leading crypto threatens to break up or down with each bounce off the edges of this range, which is now not much larger than $500. A conclusion to this months-long dance seems sure to come quite soon.

Neat bounceBTC chart by TradingView

We can see on this 4-hour chart that the leading crypto has been neatly caught at the uptrend line of this shrinking pattern. If this catch holds, we are likely to see another test of the top of the range within a few days.

The major question is, of course, will that bounce hold? Coming down to a 2-hour chart, we see weakness on the indicators with both a lower RSI and lower histogram on the dip. The histogram is also starting to tick down again after half a day of recovery.

Weak indicators, but do they matter now?BTC chart by TradingView

However, indicators are becoming somewhat less useful in this high-tension situation, where buyers and sellers will aggressively try to push the price where they want it to go in an attempt to force a breakout one way or the other. The longer it shrinks in this range, the more Bitcoin will become erratic and volatile within a very small area — until it breaks into much bigger volatility.

Bowing uptrend lineBTC chart by TradingView

We see on the 12-hour chart above that the bowing uptrend line of the consolidation structure has been respected. Price doesn’t really have much space left to pick a direction, and in fact a breakout could come at any moment — but this compression could also continue into October.

An interesting cross-reference for the Bitcoin chart is the Bitcoin market dominance chart. Bitcoin’s dominance of the cryptoasset markets retreated from very high highs in early September, upon which event the altcoin market had a decent run from very depressed levels.

BTC dominance seems likely to continue fallingBTC chart by TradingView

Bitcoin dominance has got a bounce in the last few days, and is still flirting around the 70% area. But dominance here has run into an area of resistance, and there is a decent chance that it will be rejected and continue its decline back into more reasonable areas. This is the case because, Bitcoin can only stay at these levels if the altcoin market truly starts to wither and die in a monumental way, and the entire ecosystem undergoes a paradigm shift back to a pre-2017 model — not impossible but perhaps not very likely.

One possible scenario here is that the Bitcoin bounce holds and remains in the pattern into October, and Bitcoin dominance continues its correction back down; all of which may give altcoins a bit more time to reclaim some of their lost value before a larger Bitcoin move out of the consolidation pattern.

The views and opinions expressed here do not reflect those of and do not constitute financial advice. Always do your own research.

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