Within the past six hours, the cryptocurrency market has added $5 billion to its valuation as Bitcoin demonstrated an unexpected increase in its price.
Throughout the week, Bitcoin struggled to demonstrate recovery in its volume and momentum, as it fell below the $6,500 mark, a level which the dominant cryptocurrency managed to sustain for several weeks.
Since August 9, the price of BTC has remained relatively stable in the range of $6,400 to $6,800. Apart from one instance in late September during which Bitcoin tested the $7,000 resistance level, the asset has shown a record high level of stability since June of 2017.
Earlier this week, the vast majority of technical analysts and prominent crypto traders expressed their negative stance towards the short-term price trend of BTC.
One trader who goes with the online alias “Rampage” stated that the declining volume and consistent demonstration of lower highs are expected to lead the price of BTC to drop.
“Declining volume, weaker bounces, lower highs. Demand is getting eaten up and it’s just a matter of time until we break support for new yearly lows. There is nothing bullish about this chart,” he explained.
Since then, the volume of Bitcoin actually dropped even more, from $4.3 billion to $3.8 billion on Coinmarketcap. On Coincap.io, the cryptocurrency market data provider of ShapeShift, which filters out exchanges suspected to have inflated volumes, the daily trading volume of Bitcoin hovers at around $2.57 billion, down 0.23 billion since October 2.
With the same year-to-date chart of Bitcoin, several other technical analysts predicted the price of Bitcoin to increase in the short-term, as the market started to demonstrate seller fatigue and a decline in sell pressure.
“Declining volume, weaker sell-offs, recent higher lows. Bears are getting exhausted and it’s just a matter of time before no willing sellers remain and strong hands dominate supply. There is nothing bearish about this chart,” one analyst said.
The decline in the volume of Bitcoin in itself could either represent fatigue of bears or general decline in momentum of the asset. Hence, in such a period, the less risky approach is to wait it out and observe minor movements in the market.
Given the slight bounce of major cryptocurrencies in the past few hours, it is likely that due to market exhaustion and seller fatigue, Bitcoin and other major cryptocurrencies will record minor gains in the short-term.
Already, some tokens including Wanchain, Verge and Aeternity have started to demonstrate decent gains in the 4 to 5 percent range, with Ripple (XRP) recording a solid 3.5 percent increase in price.
But, the low volume of Bitcoin still remains as a variable in the short-term. If the volume of BTC fails to supplement its short-term increase in price, then a sudden drop in the valuation of the crypto market is also possible.
Until BTC breaks out of the $6,800 resistance level however, no major movement to the upside is expected, especially considering the state of the market.
Featured Image from Shutterstock. Charts from TradingView.
Last modified: May 20, 2020 5:18 PM