Bitcoin’s price action has been creating significant fear amongst investors, with analysts and traders widely expecting it to see downside once its ongoing consolidation phase ends.
This fear is clearly seen while looking towards BTC’s funding rates, which are extremely negative at the moment as demand for short positions rockets higher.
Much of this sentiment is rooted in the news-based weakness that has come about as of late, with developments surrounding the CFTC’s pursuit of the BitMEX co-founders, coupled with macro instability in the traditional markets, leading investors to grow bearish on BTC.That being said, the asset’s strength in the face of these developments is a positive sign that could suggest upside is imminent.Where BTC trends next will be crucial for understanding the state of altcoins, which have been reeling lower as of late due to investors exiting en masse from “beta assets” that carry greater downside risk.
One trader is now noting that he is expecting Bitcoin to continue consolidating over a higher time frame, providing altcoins with room for growth in the days and weeks ahead.
At the time of writing, Bitcoin is trading up marginally at its current price of $10,620. This is around the price at which it has been trading throughout the past few days and weeks.
It is important to note that this consolidation phase is taking place squarely between the lower and upper boundaries of the $10,200-11,200 range it has formed over the past several weeks.
Even incredibly bearish news relating to BitMEX – one of the largest and most important trading venues in the market – was not enough to spark any sustained selloff.
While speaking about Bitcoin’s current consolidation phase, one trader explained that he expect it to provide altcoins with some momentum in the weeks and months ahead.
He specifically notes that the declines seen throughout the past couple of days could mark capitulation.
“I think BTC will take a while to break out of $10’400-$11’000 (ish) range. Will be more active in ALTS, lot’s of opportunities, context seems good with yesterday’s possible early October capitulation. Let the Q4 punps begin.”
If this is the case, then the DeFi sector – which has been particularly struck hard by the recent market-wide downturn – could soon see a notable rebound.