Bitcoin appears to be forming a megaphone or broadening wedge formation as it made higher highs and lower lows. This signals that both buyers and sellers are pushing strongly in either direction, but that one side will win out eventually.

Price just recently bounced off the bottom of the wedge so a move to the top could be underway. Bitcoin could keep climbing to the $3,900 resistance if buyers are able to keep up the climb.

However, the 100 SMA is below the longer-term 200 SMA to signal that the path of least resistance is to the downside and the latter is holding as dynamic resistance. This suggests that another test of support could be in the works.

Volume remains low, so there might be slim odds of a big breakout at the moment and consolidation could carry on. Stochastic is starting to turn lower without hitting the overbought zone, suggesting that sellers are eager to return.

JP Morgan analysts suggested that Bitcoin’s price could sink even lower, stating in their report:

Even in extreme scenarios such as a recession or financial crises, there are more liquid and less-complicated instruments for transacting, investing and hedging [than cryptocurrencies].

Furthermore, the institution reported that investment in the crypto industry has slumped over the past six months, adding that it was unable to find any major retailers that accepted crypto in 2018. As for price projections, they signaled that Bitcoin is likely to drop to around $2,400, and could even fall below $1,260 if the current bear market persists.

This adds to the drag on optimism that appears to be dampening price gains so far this year as traders continue to hold out for actual positive developments that could sustain rallies from upside breaks. That risk aversion is also present in global financial markets is also weighing on the appetite for riskier assets like Bitcoin.

Images courtesy of TradingView