Low volume and price side action signals that Bitcoin price volatility will increase soon.
The markets have been relatively monotonous in the last 2 months, as the price of Bitcoin (BTC) has remained between US$ 10,200 and US$ 11,000. In the last few days, the range has been reduced even more, leading some traders to predict a breakout.
However, the Bitcoin price has not shown any direction, while the altcoins have fallen. Most markets have gone through massive corrections and this is not a sign of strength for the total market.
Bitcoin price is stuck on a side strip
BTC/USD 1-day chart
The daily Bitcoin chart shows the continuation of limited construction that began after the price fell below the crucial barrier at $11,200-11,400.
As long as the price of Bitcoin remains below this resistance area, it is unlikely that a strong bullish move is expected. However, the price of Bitcoin is reaching an important point as volatility is being sucked in.
Once the volatility begins to fall, the volume also drops, resulting in a rather volatile movement.
Bitcoin 7 day volatility index
Despite all the negativity around the cryptomino markets recently, Bitcoin’s volatility has fallen. Even after the KuCoin hack, BitMEX being processed and the FCA banning trade in cryptomote derivatives, the price of Bitcoin has not reacted negatively.
In fact, the price of Bitcoin has been stabilizing since its most recent movements, which is not a sign of weakness. Moreover, the increase in new addresses suggests that a potential upward movement is just waiting to occur.
However, should this move happen in all markets or only with the price of Bitcoin?
A correction was predicted after the massive firing of several cryptomaps. The question is whether this correction has been completed or whether an additional correction is expected.
Market capitalization oscillates between key levels
Total crypto market cap 1-day chart
As the price of Bitcoin is fluctuating between levels, so is the total market capitalization of the entire sector. What the chart shows is a clear division of support, after which it is oscillating between US$ 307 and US$ 338 billion.
Similar to the movements of Bitcoin, a clear direction is unknown in the short term. Since Bitcoin’s push to US$ 12,400, the price of Bitcoin has shown a downward trend. However, since the massive drop in March, the trend has been upward.
In view of this, a possible confirmation of a higher Bitcoin low in the $9,000 region would still justify a bullish perspective, since it is a minimum higher within a massive uptrend.
Total crypto market cap 1-week chart
Obviously, the cryptomorph markets are not reflecting the same euphoria that was seen in 2017, and this is perfectly normal. The formation of a high cycle takes a substantial amount of time before the climax can occur.
Despite this, total market capitalization has been rejected at the resistance level of US$ 380 billion. A new test of the $255-280 billion areas is a very likely scenario, which would lead to a confirmation of the 100 and 200 week moving averages as well.
Potential scenario for Bitcoin
BTC/USD 1-day chart
The price of Bitcoin is still acting below resistance and losing momentum as volume is drained. Given that the trend is down from $12,400, there is more than likely to be a collapse. This would mean a rejection of the $11,200-11,400 area.
However, if the price of Bitcoin is able to break this resistance, new highs are on the horizon as the main bullish pivot is broken.
In the case of rejection, the most likely support levels to be observed are found in the $9,500-9,800 and $8,800-9,100 regions.
If another correction occurs in these regions, it is likely that the correction will be over. If this is the case, 2021 can be a very optimistic year for the entire cryptomorph market.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading movement involves risk. You should conduct your own research when making a decision.