Since late September, the low volume of Bitcoin has been an issue for the cryptocurrency exchange market. Although BTC was expected to break out of major resistance levels at $6,800 and $7,000, its low volume prevented it from recording a major movement on the upside.
Earlier today, on October 2, Ripple Labs introduced three partnerships with major banks including the $80 billion banking giant Banco Santander. One Pay FX, a platform operated by Banco Santander, became the world’s first mobile application for cross-border payments powered by RippleNet.
Subsequent to the announcement, the price of XRP declined by around 3 percent. Since then, the price of XRP has initiated a slight recovery, minimizing its loss to 1 percent.
The majority of investors in the cryptocurrency market expected the price of XRP to initiate a large short-term rally, as it had done throughout the past week. However, Ripple’s largest partnership in 2018 with Banco Santander barely had any impact on the price movement of XRP.
The struggle in the price of XRP to rebound to its yearly high following an impressive 150 percent rally in late September can be attributed to two factors: the decline in the volume of the crypto market and Ripple’s overbought conditions fueled by its three-fold increase in price since early September.
Apart from Bitcoin’s attempt to test the $6,800 resistance level at on September 28, the dominant cryptocurrency has remained fairly stable in the $6,500 range for over a week. The stability in the price of Bitcoin led technical analysts to speculate a potential short-term breakout.
However, for BTC to initiate a short-term rally, its volume needs to compliment positive technical indicators the asset has demonstrated in the past seven days.
The volume of Bitcoin remains fairly low at around $4 billion, down more than 30 percent since mid-September. On Coincap, the cryptocurrency market data provider of popular digital asset trading platform ShapeShift, which eliminates exchanges suspected of having false volumes, the daily trading volume of Bitcoin is estimated to be around $2.6 billion
Currently, technical analysts are waiting for BTC to engage in a noticeable movement to either the downside or upside. Some are awaiting BTC to close its weekly candle, which could confirm the short-term movement of the currency.
“Slowly crawling back into the range. The bulls don’t want to see a close through support. If that happened I’d target the range low. Due to an unclear monthly and weekly close, I’m sticking to scalping. No reason to trade big sizes here,” technical analyst Don Alt wrote.
In a period of stability, it is less risky to observe the market and simply wait for major cryptocurrencies to demonstrate signs of a breakout, especially for individual investors that trade low volume cryptocurrencies like tokens.
It is possible for the crypto market to initiate a rally in the upcoming days if Bitcoin can retest the $6,800 resistance level in the next 24 to 48 hours, which seems unlikely due to its low volume. But, the volume of BTC can experience a substantial spike in a short period of time so a potential breakout cannot be ruled out as of yet.
Featured Image from Shutterstock. Charts from TradingView.
Last modified: May 20, 2020 5:19 PM UTC