Price analysis: Bitcoin continues to trade in a range-bound market
2019 is behind us and for Bitcoin’s payment protocol, the Lightning Network, we can say it was a productive year.
The Lightning Network developers made great progress by primarily allowing larger amounts of money to move across the platform. Other major accomplishments were achieved in 2019 as well, such as the rollout of the first neutrino mobile wallet, the opening of the first Lightning conference, as well as the first major exchange integration.
These achievements were described as “huge milestones,” by Ryan Gentry, the lead analyst at crypto hedge fund MultiCoin Capital.
Today, using the Lightning Network has become more convenient and developers also believe they will make additional progress with multi-path payments, which will allow large sums of Bitcoin to be transferred quickly and inexpensively.
“This is a very exciting time for Lightning,” said Samson Mow, CSO at the Canadian blockchain technology company Blockstream.
“For 2020, I expect to see the continued growth of the network and further privacy improvements as well.”
Bitcoin has seen an increase in demand again on the back of the rising geopolitical tensions. The recent US airstrike in Iraq, which resulted in the assasination of the top Iranian commander Qasem Soleimani, caused Bitcoin, gold, and oil prices to soar higher on Friday morning.
Recovering from under $7,000, Bitcoin’s price ultimately raised nearly 10% since Friday.
Political issues are often perceived as the main influence on crypto prices and there are different opinions on the question of whether Bitcoin is a safe haven or not.
Apart from Bitcoin, gold and oil prices also jumped after the news broke.
“The surge in crude oil is to be expected, the surge in Bitcoin is a total surprise,” said crypto analyst Mati Greenspan.
One of the things that made Bitcoin captivating is that until now, it did not correlate with the other non-crypto safe-haven assets like gold, said Matthew Graham, CEO of the financial services company Sino Global Capital.
While Bitcoin’s recent jump in price has encouraged some of the crypto enthusiasts to further praise Bitcoin as a 'safe haven' asset, stockbroker Peter Schiff strongly disagreed in his latest tweet, saying that these price changes in Bitcoin were caused by speculators.
The latest comments from Schiff come as no surprise, given his widely-known beliefs that the world’s largest cryptocurrency is nothing more than a fraud.
The Bank of America would disagree with Schiff, after the banking giant named Bitcoin as “the best investment of the decade”.
“If you invested $1 in Bitcoin at the start of the decade, it would now be worth more than $90,000,” it is stated in a recent report by Bank of America Securities.
While the global markets have started the new year with the risk-off trading approach, Bitcoin hasn’t increased in value as much as it needs to break out of the current range of $6400 - $7700.
As seen in the price chart below, Bitcoin’s price is currently trapped within two different channels. First, the down-slipping channel (the purple parallel lines) has contained the price action since June last year and there is no indication that Bitcoin will attempt to leave the channel anytime soon.
Looking more short-term, Bitcoin price has created another channel (the red parallel lines) in the last few weeks as the bulls and bears continue to fight over who will make the next big move. The bulls seem to have an upper hand, mainly thanks to the rising geopolitical tensions, as Bitcoin is currently attempting to break above the channel’s resistance.
Above the red channel, there is another level of resistance at $7950 in the context of the 100-DMA. In addition, the bigger channel of resistance sits at $8400, creating a block of resistance between $7600 and $8400.
On the other hand, Bitcoin’s major support in this zone is still the ascending multi-year trend line (the red ascending line). It has seen three failed attempts from bulls to get past this support. Furthermore, there are 3 different layers of support in the zone between $5800 and $7000.