After a week or more of frankly boring Bitcoin (BTC) price action, volatility has returned to the leading crypto as of last night (September 18, UTC) with a 5% dip in price. This dip has put the breaks on the entire cryptoasset market, and especially on the altcoins, which were seeing some impressive gains.
Bitcoin is approaching the end of a consolidation pattern, which it has been chewing through for months. And on this 4-hour chart, we can see that the leading crypto did not even make it to the resistance zone of this pattern before being rejected.
In this consolidation structure, Bitcoin has retested the mid-$9,000 area on every dip. This means that we can reasonably expect another leg down in this tiny Bitcoin downtrend, and again test this level sometime soon. The leading crypto is already oversold on the 4-hour RSI, so any more downside will probably have to wait for some cooling off throughout the day.
Turning to the big picture on the 2-day chart, we see that this pattern could continue continue until mid-October at most. We also see a number of key levels to watch in this structure.
And zooming into this same chart (above), we see that price has not closed below the 100 exponential moving average (EMA) on the 2-day, although it is now being squeezed against this level. The next candidate down to hold Bitcoin is the local uptrend line at about $9,500. Finally, the low $9,000 range is the last line of defense for keeping Bitcoin inside of this consolidation zone.
Finally, we look at the Bitcoin market dominance chart. Because the real story in the last week or so has not been Bitcoin, which we have said has been quite docile, but rather the altcoin market. Altcoins like Ethereum (ETH), Litecoin (LTC), XRP (XRP) and EOS (EOS) have all seen hefty gains over the past week. This is reflected in Bitcoin's waning market share of the total cryptoasset market.
Above, we see that Bitcoin dominance of the market has begun to correct sharply from very high levels above 70%. The trend here is clearly down, and we are likely to see a further slide in Bitcoin dominance. This could translate into further gains for altcoins in the coming weeks - especially if Bitcoin manages to stay within its fairly calm window of consolidation.
Because, once Bitcoin moves out of its consolidation zone, whether up or down, it is likely to move hard. Such extensive (multiple months) consolidations build up huge amounts of market pressure, and explosions in Bitcoin volatility usually has the effect of putting the altcoin market on the back burner.
The views and opinions expressed here do not reflect those of CryptoGlobe.com and do not constitute financial advice. Always do your own research.
Featured Image Credit: Photo via Pixabay.com