Bitcoin has spent a whole week bouncing between $11,000 and $12,000—what were the main events and what might they say about future price action?
Modern Consensus takes a look at what happened in Bitcoin this week, part of a regular series each Friday. We also publish a Monday markets forecast, the latest edition of which can be found here.
BTC consolidates above $11,000
Bitcoin began this week in a highly bullish mood, challenging $12,000 resistance twice in 24 hours on the back of a turbulent weekend.
Volatility remained, with the final attempt to flip $12,000 to support met by a sudden dip of over $500 in minutes.
This set the scene for a return to “ranging” price behavior for BTC/USD—movements can be significant, but always within a defined corridor. This time, the corridor was far wider than that which characterized the market before July’s price gains.
At press time, Bitcoin was yet to show signs of breaking the trend, keeping $11,000 as support and $12,000 as a firm ceiling.
The mood among analysts was optimistic despite the lack of continued upward trajectory.
For popular analyst filbfilb, factors at play include those originating from both within and outside Bitcoin circles.
A rebound in the price of gold after it lost $2,000 support earlier in the week provided a solid foundation.
“Within the last few days, the price of gold passed $2,000 per ounce,” Pepperdine University economics professor George Weisman wrote on Friday.
“Since there are 2,000 gold cents in a 1-ounce $20 gold coin, this means that the price of a paper dollar has fallen below 1 gold cent. Thus, we now have the gold penny paper dollar.”
“Highly correlated” safe havens are a boon for BTC, filbfilb told Telegram subscribers on Thursday, while buyer support also pleased.
“Price action showed a big bounce out of demand – lots of wicks,” he summarized.
“…We are still in an uptrend so I should lean on the side of bullish… Alts keep moving higher and in sideways BTC that is bullish.”
Institutions fuel anticipation of gains
As Modern Consensus reported, altcoins’ gains have pushed back Bitcoin’s market dominance, with market cap share retreating below 60%.
Largest altcoin ether is among the leaders, despite concerns over the DeFi frenzy and separate controversy focusing on the inability of anyone to know its total supply.
For fellow analyst Michael van de Poppe, the outlook for ETH/USD was “inevitable”—a bull run to $700.
“The new cycle has only just started,” he added about Bitcoin.
Other events set the tone for a rethink of Bitcoin’s mass appeal this week. Institutional involvement, long vaunted but away from the spotlight, suddenly hit the headlines as MicroStrategy bought 21,454 BTC for $250 million.
“We find the global acceptance, brand recognition, ecosystem vitality, network dominance, architectural resilience, technical utility, and community ethos of Bitcoin to be persuasive evidence of its superiority as an asset class for those seeking a long-term store of value,” CEO Michael Saylor said in an accompanying press release.
“Bitcoin is digital gold—harder, stronger, faster, and smarter than any money that has preceded it. We expect its value to accrete with advances in technology, expanding adoption, and the network effect that has fueled the rise of so many category killers in the modern era.”
At the same time, investment giant Grayscale returned to buying BTC, with combined demand from the two companies easily outstripping newly-mined coins.
New targeted advertising campaigns from Grayscale and asset manager Galaxy Digital, in the form of a TV commercial and spreads in major newspapers such as the Financial Times, also went live.
In another timely publicity boost for the cryptocurrency, celebrity trader Dave Portnoy subtly hinted at a desire to send it to $12,000 by the end of the day on Thursday.
The exposure sparked excitement. “If $BTC breaks 12K today everyone and their mothers will be talking about the Portnoy effect,” economist and trader Alex Krueger commented.
In the event, no such knock-on effect occurred for Bitcoin. At press time, $11,700 following a trip to $7,840 still put Bitcoin in line with bullish requirements from filbfilb, who was eyeing $11,600 to continue the bull run.
As the week draws to a close, attention will focus on Sunday’s weekly close. Specifically, analysts will seek an answer to the question: can BTC/USD clinch another week at its highest weekly close since 2018, or did last weekend provide a local top?