Bitcoin’s price continued to trade within a narrow range on August 19, extending a consolidation phase that has lasted nearly two weeks. Currently priced at $58,000, Bitcoin has contributed to a 2.2% decline in the global cryptocurrency market cap, which now stands at $2.06 trillion.
Ongoing Consolidation and Low Trading Volumes
This period of limited price movement comes as both spot and futures market volumes have stagnated. Bitcoin’s open interest saw a slight increase on Monday, reaching $30 billion, but this is still below the month’s peak of $36 billion. Spot market volume for Bitcoin also dropped to $17 billion on Monday, a significant decrease from the August 6 high of over $120 billion. Generally, low trading volumes are observed when Bitcoin and other cryptocurrencies are not in an uptrend. Additionally, trading volumes for Solana, Ethereum, and Base Decentralized Exchange platforms have decreased by over 20% in the past week.
In the meantime, some major Bitcoin holders appear to be offloading their positions. Lookonchain reported that Ceffu, a company providing custody and liquidity solutions to institutions, has moved $211 million worth of Bitcoin to Binance since July 31.
Positive Indicators Amid Stagnation
Despite these developments, Bitcoin shows some promising signs. Notably, it has remained stable despite ongoing movements related to Mt. Gox. Data reveals that the Bitcoin held in Mt. Gox wallets has decreased from 141,686 coins on January 1 to 46,164, suggesting that the market has absorbed these sales without significant price drops.
Moreover, there is an increasing number of large institutions holding spot Bitcoin ETFs, signaling growing mainstream acceptance. Companies such as Goldman Sachs, HSBC, and Barclays are among those showing interest.
Chart Patterns Signal Potential Breakout
Longer-term charts indicate that Bitcoin is holding its ground well. On the weekly chart, Bitcoin has consistently stayed above the 100-week Exponential Moving Average since October last year. Additionally, Bitcoin has formed a falling broadening wedge chart pattern, which typically leads to a bullish breakout. This pattern, characterized by lower lows and lower highs, usually sees a significant breakout when the price moves above the lower side of the wedge.
Bitcoin has also formed a cup and handle pattern, with the upper boundary at $68,830. The wedge pattern is part of this handle, and the accumulation and distribution indicator has reached its highest level in years.
The monthly chart further supports the potential for upside in Bitcoin’s price. Similar to the weekly chart, it shows a cup and handle pattern, with the accumulation and distribution indicator near its all-time high. Bitcoin has remained above the 50-month moving average and is forming a hammer candlestick pattern, which is characterized by a long lower shadow, a small body, and little to no upper shadow. For this pattern to fully form, Bitcoin needs to close the month slightly below $64,000. If this occurs, it could signal further upside.
In the long term, a confirmed Bitcoin rally could be expected if it breaks above the year-to-date high of $73,902.
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