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Money

Is Bitcoin Building Support Above $3,500?

Bitcoin has been trading within a reasonably tight range for the last several weeks, fluctuating primarily between $3,500 and $4,000.

Over the last week, this range has tightened, as bitcoin prices have been moving between $3,500 and $3,700, CoinDesk bitcoin price data reveals.

Amid this relative malaise in the world’s largest cryptocurrency by market capitalization (market cap), several analysts weighed in on whether bitcoin has been building up support above $3,500.

[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.]

Establishing Support

The digital currency has been accumulating support, according to some market observers, including Mati Greenspan, an analyst who works for social trading platform eToro.

“Over the last three weeks, we’ve seen a mini range emerge from $3,500 to just above $4,000 as bitcoin consolidates,” stated Greenspan.

However, he emphasized that “The wider range is $3000 to $5000.”

Jon Pearlstone, publisher of the newsletter CryptoPatterns, offered similar input.

“Since mid-November, bitcoin has built a clearly defined bullish inverse head and shoulders pattern with a target in the $5000 range,” he stated.

“The most recent move back down to retest key support at $3500 was expected as part of this pattern, and the current consolidation continues to offer an edge for the bulls as long as support holds above $3500.”

Warning Signs

Pearlstone identified out some warning signs that could point to trouble for bitcoin, emphasizing the cryptocurrency’s lackluster trading volume and describing it a “red flag.”

He also spoke to the difficulty bitcoin has faced in breaking free of its current price range, labeling it a serious cause for concern.

Eric Ervin, CEO of Blockforce Capital, also spoke to bitcoin’s modest volatility, stating that this measure of the digital currency’s price fluctuations recently fell to its lowest in more than a year.

“Despite bitcoin’s recent volatility spikes in December and early January, its rolling 14-day volatility has been steadily declining — trending downward from a peak of 140 on November 28th to today’s value of 60,” he stated yesterday.

“This is the lowest volatility we’ve seen since mid-November 2018.”

Breakout Potential

Bitcoin could soon break free of this range, noted Ervin.

“In the roughly six days bitcoin has traded above $3,500, we’ve witnessed what looks like an early stage pennant formation,” he stated.

“We therefore expect there is a high likelihood of a decent breakout in the near future, although it’s still too early to tell which direction the market will go,” said Ervin.

Pearlstone also spoke to a potential breakout, stating that:

“If the price doesn’t move up soon back to the $4000 level, which would then put the $5000 target into play, a break of $3500 and retest of the $3000 level become the highest probability next move.”

This story originally appeared in Forbes. Image courtesy of Shutterstock.

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