Bitcoin's Sub-$38K Consolidation: A 3-Week Bullish Indicator

• Bitcoin's Consolidation Phase Exhibits Bullish Undertone
• Stalled Bitcoin Rally and Persistent Price Consolidation
• Bitcoin's Ascending Channel and The Potential Bullish Breakout
• Seasonal Trends and Bitcoin's Average December Gain

Bitcoin's Consolidation Phase Exhibits Bullish Undertone

The ongoing three-week consolidation of Bitcoin$42,260 -0.64% below $38,000 shows a bullish undertone, characterized by shallow price dips. This is a positive indication, as per market observations. The seasonality seems supportive of Bitcoin's price gains continuing throughout December.

Stalled Bitcoin Rally and Persistent Price Consolidation

Bitcoin's (BTC) price rally has been at a standstill since November 9, encountering difficulty in surpassing the $38,000 mark. However, it does not imply that the uptrend has halted. A more detailed analysis of the price pattern during this consolidation phase suggests otherwise.

Despite the gains being limited to near $38,000, the subsequent retractions have been brief and not very deep, implying a persistent buy-the-dip demand amidst the price consolidation. This pattern of a horizontal upper resistance and a rising lower boundary due to shallow dips can be identified as an ascending triangle formation on the price chart.

In simpler terms, this could mean Bitcoin is gaining momentum for its next upward move.

Bitcoin's Ascending Channel and The Potential Bullish Breakout

Bitcoin is oscillating in an ascending channel, reaching its three-week upper resistance of $37.8K on Wednesday evening. Despite an intensifying sell-off thwarting attempts to elevate the price, the pullbacks have grown less pronounced in the past three weeks, hinting at a growing bullish sentiment, stated Alex Kuptsikevich, a senior market analyst at FxPro.

The upward sloping support line along with the horizontal resistance line signifies an ascending triangle pattern. Ascending triangles usually result in a bullish breakout, extending the preceding uptrend, as pointed out by chartered market technician Charles D. Kirkpatrick II and technical analyst Julie R. Dahlquist in their book Technical Analysis: The Complete Resource for Financial Market Technicians 3rd Edition.

The occurrence of upward breakouts is 77% of the time, and breakouts happen around 61% of the distance (time) from the base to the cradle, Kirkpatrick II and Dahlquist write in their book, cautioning about the possibility of failed breakouts.

A false breakout occurs when prices surpass the resistance, only to quickly fall back into the pattern, trapping buyers on the wrong side of the market. Kuptsikevich predicts Bitcoin to rise above $40,000 if there's a potential breakout in the ascending triangle. Markus Thielen, the Head of Research and Strategy at Matrixport, a crypto services provider, suggests a breakout could propel Bitcoin to potentially target $45,000.

Seasonal Trends and Bitcoin's Average December Gain

Seasonal trends suggest a further upward move in cryptocurrency. Over the past eight years, Bitcoin has averaged a gain of 12% in December, according to data tracked by Matrixport.

Seasonality appears to be taking effect once again. The average return in December of +12% is commendable and could push Bitcoin to $42,000 - by this criterion alone, Thielen indicated in a note on Thursday.

Edited by Jonathan Stoker