The number of Institutional investors stepping in to Bitcoin continues to increase and this appears to be inspiring some newfound confidence in Bitcoin price. Just today Square announced that it had purchased 4,709 Bitcoin (BTC) for $50 million.
Square is not the only large company to take this action. Recently, MicroStrategy made waves for also announcing a significant purchase of Bitcoin.
These news events could be a signal to investors that a new cycle is starting up and bigger parties are showing significant interest in Bitcoin. However, will this also affect the short term as Bitcoin is still hovering beneath the crucial $11,000 resistance?
Volatility is at its lowest point since the halving
Bitcoin volatility 7-day index. Source: TradingView
Bitcoin volatility is showing signals of boredom, as the metric is back to levels seen in July. That was the period after the halving, which caused a lot of sideways action in Bitcoin price for weeks.
However, as bullish news enters the markets, some short term hype can be established in Bitcoin price action. A breakout out of the currenty triangle would be bullish for Bitcoin, but investors should be cautious.
The crucial break is the $11,000 resistance
BTC/USDT 3-hour chart. Source: TradingView
As the trendline is holding for Bitcoin, a breakout to the upside occurred. This caused the price of Bitcoin to break through the crucial triangle; however, that’s not the most crucial pivot to watch for.
Investors should watch to see whether the previous support area between $11,100-$11,300 can break. If that area breaks and flips for support, further upwards momentum is warranted.
Such a breakout would cause altcoins to show strength as well, as they’ve been hammered heavily in the previous weeks. The best climate for altcoins is an upward moving Bitcoin as this gives investors a calm market environment to trade altcoins.
A significant indicator of altcoins is Ethereum (ETH), which is currently resting on a significant support level.
ETH/USD 1-week chart. Source: TradingView
The Ether chart shows signals of a potential bottom construction, but the crucial green area has to hold for further momentum.
If the $290-$320 area breaks for support, a further downward crash is likely to go to the 200-Week Moving Average which currently resides near $220.
However, if the price of Ether sustains support around the $290-$320 area, a potential range-bound construction between $300 and $450 can be established.
That’s a bullish signal, as the price of Ether would then consolidate on a higher level than the previous two years.
potential scenario for Bitcoin
BTC/USDT 6-hour chart. Source: TradingView
The chart might seem like a potential case of ‘price will go up or down’, but it’s surrounded by a few critical levels to watch.
Essentially, if the price of Bitcoin breaks through the $11,100-$11,300 resistance zone, further bullishness can be expected towards $12,000. This makes the $11,100-$11,300 area is a critical zone for continuation.
If this level cannot break and the trendline is lost, a likely retest of $10,000 is on the cards again.
Until then, a dash of short term bullishness is all market participants can expect.
Title: Bitcoin price turns bullish on Square’s $50M BTC purchase: Is $11K next?
Sourced From: cointelegraph.com/news/bitcoin-price-turns-bullish-on-squares-50m-btc-purchase-is-11k-next
Published Date: Thu, 08 Oct 2020 17:23:00 +0100