The cryptocurrency markets have witnessed several occasions of volatility throughout this past week, starting with the drop that occurred over this past weekend that sent Bitcoin to lows of $3,550, from which it bounced on Monday.
Since then, the markets have been trading relatively sideways, and analysts are now saying that Bitcoin could surge to $5,000 in the near future.
Bitcoin Trades Flat, Volatility Decreasing
At the time of writing, Bitcoin (BTC) is trading up under 1% at its current price of $3,670. BTC is up from its weekly lows of $3,550 but is down slightly from its weekly highs of $3,720.
As discussed in previous market updates, Mati Greenspan, the senior market analyst at eToro, previously noted that Bitcoin is currently caught in a trading range between $3,550 and $4,200, which is within a wider trading range between $3,000 and $5,000.
While speaking to Forbes, Jon Pearlstone of the CryptoPatterns newsletter, said that $5,000 could be the next price level that Bitcoin is targeting, assuming that its bulls are able to maintain its price above $3,500 for the near future.
"Since mid-November, bitcoin has built a clearly defined bullish inverse head and shoulders pattern with a target in the $5000 range… The most recent move back down to retest key support at $3500 was expected as part of this pattern, and the current consolidation continues to offer an edge for the bulls as long as support holds above $3500,” he explained.
Furthermore, Pearlstone also noted that if BTC drops below $3,500, there will be little support to stop it from falling to $3,000.
"If price doesn't move up soon back to the $4000 level, which would then put the $5000 target into play, a break of $3500 and retest of the $3000 level become the highest probability next move," he said.
Eric Ervin, the CEO of Blockforce Capital, also noted that the markets are seeing decreasing volatility despite this week’s choppy trading, with BTC’s volatility dropping to its lowest levels since mid-November.
"Despite bitcoin’s recent volatility spikes in December and early January, its rolling 14 day volatility has been steadily declining -- trending downward from a peak of 140 on November 28th to today’s value of 60," he stated yesterday… This is the lowest volatility we’ve seen since mid-November 2018,” Ervin explained.
He also said that he, like Pearlstone, expects Bitcoin to break upwards in the near future.
"In the roughly six days bitcoin has traded above $3,500, we’ve witnessed what looks like an early stage pennant formation… We therefore expect there is a high likelihood of a decent breakout in the near future, although it’s still too early to tell which direction the market will go," Ervin said.
Altcoin Markets Trade Sideways
The general cryptocurrency markets are closely following Bitcoin’s price action and have all been trading flat over the past several days.
At the time of writing, XRP is trading down marginally at its current price of $0.328. XRP is up from its weekly lows of $0.317 which were set this past weekend.
Ethereum (ETH) has also dropped slightly today and is currently trading down 0.5% at its current price of $122.90. Earlier this week, ETH dipped to $120 due to its highly anticipated Constantinople hard fork event being delayed due to a security flaw. A new date for this hard fork has not yet been announced.
Bitcoin Cash (BCH) is trading up 1% at its current price of $130, up from its weekly lows $124.
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