Bitcoin (BTC) managed to bounce back above the $29,000 mark on August 8, as one trader detected signs of a potential breakout in progress.
Following a slight rebound from local lows of $28,670, Bitcoin remained within a narrow range and seemed to mirror movements in the United States equities during the August 7 Wall Street trading session.
Although there was no significant momentum in either direction, market participants were eager to identify signals indicating a possible return of a trend.
Trader Jelle spotted a potential falling wedge breakout on daily timeframes, noting that this formation could lead Bitcoin’s price to a target of $32,000.
This wedge pattern had emerged at the beginning of July, marking the second such formation in two months, the first one appearing from April to the end of June.
Michaël van de Poppe, the founder and CEO of trading firm Eight, characterized the previous day’s dip as a standard correction.
He observed that the market quickly bounced back, resulting in a decent daily candle. However, market participants were also keeping a close eye on the July print of the U.S. Consumer Price Index (CPI), which has historically been a catalyst for crypto market volatility.
On intraday timeframes, the situation was more complex as market makers and takers engaged in a dynamic interplay on exchanges.
Skew, a popular trader, highlighted that failure to break down the price forced spot takers to bid, particularly since they had led the sell-off around the $29,000 level.
In a more optimistic analysis, Yann Allemann and Jan Happel, co-founders of on-chain analytics firm Glassnode, argued that the dip below $28,000 held more significance as a local bottom than many realized.
According to Glassnode’s Risk Signal metric, Bitcoin was at its highest-risk trading level in several months.
Coupled with a neutral signal on altcoins and overall volatility near its lowest-ever values, the market was poised for potential bullish activity.
As the market approached being oversold, there were indications that bulls might step in, particularly if Bitcoin tapped the liquidity pool at around $28,500.
This was viewed as a potential reversal point that market participants had been hoping for.
However, given the volatile nature of the cryptocurrency market, caution was advised as fluctuations could quickly alter the landscape.
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