The past few weeks have made it increasingly unclear as to where Bitcoin and the crypto markets are heading next, as BTC has now entered a firm consolidation trend that has led it to trade sideways within the mid-$8,000 region.
One prominent cryptocurrency analyst is now noting that Bitcoin could be on the cusp of entering a “max pain scenario” that leads BTC to firmly trade within an incredibly wide trading range until investors’ interest in the market dries up.
Although this does spell some trouble for the crypto in the near-term, it is important to note that this may be the type of mid-term price action that is required for Bitcoin to garner enough momentum to extend its 2020 uptrend to fresh yearly highs.
Bitcoin on the Cusp of Entering a Massive Trading Range
At the time of writing, Bitcoin is trading up just under 2% at its current price of $8,500, which marks a notable climb from its daily lows of $8,300.
It is important to note that BTC has been struggling to move back into the upper-$8,000 region ever since it broke below the lower boundary of the tight trading range around $8,700 that it had been caught within for several days after its rejection at $9,200.
Josh Rager – a prominent and well-respected cryptocurrency analyst on Twitter – explained in a tweet that although he does not believe that Bitcoin will drop towards $5,000 like some bearish analysts do, he does think that it may experience a “max pain scenario” that entails it ranging between $7,000 and $9,000.
“After the breakdown at $9200, many are pointing to $5ks again for BTC. IMO, looks like potential accumulation in this range between $7k to $9k. Max pain is sideways – just enough to disinterest and to keep retail investors from buying heavy in fear of lower prices,” he explained.
https://twitter.com/josh_rager/status/1221435185897578501?s=21
Extended Bout of Rangebound Trading May Mark BTC Accumulation Phase
Although the potential extended bout of rangebound trading may hamper investor sentiment and spark fear of another prolonged downtrend, it is possible that it may also mark an accumulation phase for savvy investors.
Rager also mused this possibility in a later tweet, explaining that previous bouts of significantly rangebound trading have ultimately resulted in upwards movements.
“Most aren’t willing to sell Bitcoin out of fear if price drops below $6k. But many would likely take the opportunity to buy more Bitcoin. In the previous range, everytime Bitcoin dropped in the $6ks, it was bought up within a couple days to push price back over $7k,” he explained.
https://twitter.com/Josh_Rager/status/1221435187046817793
If this scenario does play out as Rager anticipates, the markets could soon see a prolonged bout of sideways trading while investors accumulate, which means that this could ultimately be followed by a serious extension of its recent upwards momentum.
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