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Bitcoin (BTC) has been caught in the throes of consolidation for the past several weeks and months, and it has failed to garner any momentum in either direction in the time since it plummeted below $10,000.
This period of consolidation may soon be coming to an end, however, as one technical indicator is elucidating that a massive movement may be imminent, and one analyst believes that Facebook’s Libra may play a role in BTC’s future volatility.
Bitcoin Consolidates as Bulls and Bears Remain Deadlocked
At the time of writing, Bitcoin is trading down marginally at its current price of $8,250, and its buyers have failed to significantly extend the upwards momentum that it incurred in the time since it visited $7,900 late last week.
Bitcoin has been caught in a relatively tight trading range between roughly $7,800 and $8,800, with significant support at the former price and strong resistance at the latter price.
It is important to note that this period of sideways trading has come about after Bitcoin’s massive drop from its previous support level at $10,000, and although the mid-term trend remains bearish, the noteworthy support that has been established at $7,800 may mark a long-term bottom for the cryptocurrency.
In a recent report on Bloomberg, it is noted that Bitcoin’s Trading Envelope indicator is currently at its narrowest since mid-September, which means that another massive movement may be imminent for the cryptocurrency.
“The gauge smooths moving averages to map out higher and lower limits and a similar narrowing last month preceded a drop of more than 12% for Bitcoin on Sept. 24,” the report explained.
Facebook’s Libra May Contribute to BTC Volatility
Detailed in the same report, Matt Maley, an equity strategist at Miller Tabak + Co., explained to Bloomberg that he believes the fate of Facebook’s Libra is currently contributing to BTC’s price action, and that the crypto will only be able to resume its standard market cycles ones the headwinds from Libra die down.
“As it becomes more and more obvious that the Libra thing is not going to take off – it’s going to be a long time before it becomes an important part of anything Facebook’s doing – as that becomes more obvious, the volatility will pick up again… This issue with what’s going on with Libra and Facebook is a definite headwind and it’s not going to go away.”
Although it does remain unclear as to whether or not Libra is truly having any significant influence on Bitcoin’s price action, as its fate grows increasingly clear, it may allow Bitcoin to regain control of the news cycle.
Cole Petersen
