Bitcoin Price Avoids Bigger Fall amid Market-Wide Consolidation
Bitcoin traded to the upside on Wednesday, snapping a multi-session losing streak that dragged prices toward new lows for the year. The outlook on BTC and other cryptocurrencies remains overwhelmingly bearish, which means investors can expect a re-test of last week’s lows relatively soon.
The bitcoin price reached a high of $3,570.00 on Bitfinex, a modest recovery from early-week lows. It last traded at $3,513, having gained 2.2% from the previous day. BTC values on Bitfinex had a $100 premium compared with exchanges like Coinbase, Bitstamp, Bittrex and Gemini.
Looking to the aggregate data via CoinMarketCap, bitcoin is trading hands at an average of $3,478 for a gain of 2%. Daily trading volumes reached $4.6 billion, with spot accounts driving an increasing share of the market activity. Over the last 24 hours, the BitMEX derivatives exchange processed 19.2% of bitcoin trades on virtual currency platforms. That figure was around a quarter on Tuesday.
The total market capitalization of all cryptocurrencies recovered around $110.4 billion on Wednesday, having gained roughly $3 billion from Tuesday’s low.
Volatility on the Rise
Bitcoin continues to exhibit extremely high volatility relative to the past six months, where markets carved out a narrower and more predictable trading range. The brief era of ‘stable bitcoin’ came to an abrupt end last month as market participants braced for a highly contentious hard fork of the bitcoin cash network. Markets have yet to recover from that cataclysmic event, which not only ruptured the BCH community, but diverted valuable hash power away from the original bitcoin.
The bitcoin volatility index, which tracks the daily price fluctuations of BTC over the past 30 days, has rose to 5.7% on Tuesday, according to bitvol.info. That’s the highest level since early March, when the market was facing a broad reversal from record highs.
BTC has struggled to put together a convincing recovery in the wake of the recent selloff, with prices overcoming the $4,000 barrier on only one occasion in the last two weeks. The new resistance test appears to be concentrated around $3,700-$3,800, a clear sign that the market was in the process of carving out lower highs and lower lows. On the opposite side of the spectrum, the leading digital currency has fallen to the low $3,300 on multiple occasions and appears poised to test the upper range of the $2,800-$3,200 support zone.
The general view seems to be that bitcoin still has a way to go before fully bottoming out. That largely explains why so many investors have been reluctant to enter the market at today’s prices. For the time being, attention should be paid to the aforementioned support to determine possible entry.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock.