Following its recent surge, Bitcoin has now found itself caught under $4,000, despite finding stability in the $3,900 region. Analysts are now claiming that BTC’s trading volume will likely be the best indicator as to if the cryptocurrency has enough buying pressure to propel its price above the important psychological price level of $4,000.
Analysts also believe that Bitcoin may need to drop slightly before finding enough buying pressure in order for it to continue its upwards ascent, and that traders who buy this pullback could incur 30% gains in a relatively short period of time.
Bitcoin (BTC) Struggles to Push Above $4,000
At the time of writing, Bitcoin is trading down nearly 1% at its current price of $3,940. Ever since BTC surged towards its current price levels earlier this week, its price has been rejected each time it touches $4,000, which validates this price as a resistance level.
Analysts now believe that traders should look towards trading volume as a key indicator that will signal whether or not BTC will push above $4,000.
Mati Greenspan, the senior market analyst at eToro, spoke about Bitcoin and the important role trading volume is currently playing in BTC’s price action in a recent email, noting that trading volume on the aggregated markets has tapered off slightly over the past couple of days.
“Putting the rally into further context, I’d like to zoom in on our descending wedge that we’ve been tracking for the past few weeks. For now, the market seems to be flirting heavily with the $4,000 level (doted white line)… Volumes have tapered off slightly to about $28 billion over the last 24 hours. Still much higher than the $15 billion it was at just two weeks ago. This is a good sign that cryptotraders are watching closely at the moment as the battle royale for $4k plays out,” he explained while referencing the below chart.
Chonis Trading, a popular cryptocurrency analyst on Twitter, shared a similar sentiment in a recent tweet, noting that BTC’s current trading volume is the best current indicator of Bitcoin’s bullishness.
“$BTC – daily candle opened inside upper BB after closing 3 days above. RSI over 70, Stoch RSI double topping on declining volume. Still looking for consolidation after 6 days of green candle expansion before another attempt to break $4k…. How bullish is #bitcoin? volume will tell,” he said.
Analyst: Buying Bitcoin Pullback Could Be Highly Profitable Trade
Although Bitcoin does appear to be somewhat bullish in its current state, one popular cryptocurrency trading group on Twitter – called Trading Room – recently explained that buying a potential BTC pullback could be a highly profitable trade.
“$BTC… No ifs, No buts… Buying on pullback as well as break for a potential 25-30% Gains without leverage… I need only confirmation 7EMA crossover 100 MA in daily. Lets see how this plays in next few days,” they explained.
As Bitcoin continues to trade sideways and its current volume trends become clearer, traders will likely gain greater insight into which direction BTC is heading next.
Featured image from Shutterstock.
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