Bitcoin Price Awaits Breaking Point as Volatility Hits 14-Month Lows

Bitcoin’s price charted a narrow path on Tuesday, with the technical charts continuing to show signs of a potential breakout in the not-too-distant future. As we’ve seen before, where bitcoin goes the market follows.

BTC/USD Update

The bitcoin price rose 2.4% on Tuesday to trade at $6,407.90 on Bitfinex. The leading digital currency traded as high as $6,526.20, which is still a ways off of last week’s swing high north of $6,600.

Compared with 24 hours ago, bitcoin is virtually unchanged. By comparison, altcoins and tokens were down 2%. As a result, bitcoin’s overall market share has edged risen to 52.9%, according to CoinMarketCap.

An evaluation of the 4-hour chart shows steady progress in bitcoin’s underlying technical indicators. Price action remains above the 50-period moving average. From the perspective of momentum, MACD is above the zero line and the relative strength index is holding near 51.

Taking a wider perspective, bitcoin is exhibiting the same lateral trading pattern that we’ve witnessed before in the lead up to major rallies.

Bitcoin Volatility Plummets

From the perspective of volatility, the bitcoin market is making significant progress amid the months-long downtrend. According to Diar, a weekly publication on cryptocurrencies and blockchain, bitcoin’s volatility rate declined in July to the lowest level in 14 months. Perhaps more significant is the fact that bitcoin’s price volatility is “setting an actual trend downwards for the first time,” offering tangible signs of a maturing market.

But declining volatility does not necessarily mean that bitcoin is more liquid than it was before. Trading volumes in the leading digital currency have been declining all year long as the pool of new traders continuing to dry. Case in point: leading digital currency exchange Coinbase has seen its trading activity plummet 83% since January (though offshore platforms have gathered pace). Coinbase hs been vocal about developing its institutional trading arm and has developed a range of custody services to unlock what it believes to be as much as $10 billion sitting on the sidelines.

Diar’s report clams hat bitcoin’s volatility has steadily declined since the introduction of CBOE/CME futures contracts in December. This view runs contrary to arguments claiming that the introduction of bitcoin futures have been responsible for higher volatility. If Diar is correct, the introduction of a bitcoin exchange-traded fund (ETF) could offer yet another calming influence on the market.

At the time of writing, there are at least four applications for a bitcoin ETF under consideration by the U.S. Securities and Exchange Commission (SEC). Chief among them is the VanEck SolidX Bitcoin Trust, which will be backed by physical bitcoins and insured against loss or theft.

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.

Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi