Bitcoin Price Buckles Under Corrective Pressure; $4,000 Support Holds
Bitcoin’s price gave back a big chunk of its weekly gains on Friday, as the market entered into technical correction following sharp rebounds earlier in the week.
The bitcoin price swung below $4,000 briefly on Friday before recovering above the psychological threshold. At the time of writing, BTC/USD was trading hands at $4,054 on Bitfinex, having declined 6.2% over the previous day. Daily trade volumes have also cooled to $6 billion compared with earlier highs of $7.3 billion.
Bitcoin’s sudden correction is somewhat surprising given the sharp rebound in momentum observed earlier in the week. As the 4-hour chart illustrates, BTC/USD still had a way to go before being considered overbought on the RSI. The RSI momentum indicator has since cooled to around 44, which is typically seen as a bearish sign.
Aggregate market data courtesy of CoinMarketCap show a market still very much dominated by futures trading. BitMEX, a popular cryptocurrency derivatives platform, processed nearly 30% of bitcoin’s exchange-traded volumes on Friday. That level has remained relatively stable all week long. In terms of spot trading, Binance, CoinBene and Liquid were the largest markets for bitcoin in terms of daily volume.
A November to Remember
November was a brutal month for the leading digital currency, as price action challenged underlying assumptions about bitcoin’s newfound calm and the role of futures in stabilizing the market. At the beginning of the month, bitcoin exhibited the lowest recorded volatility in over two years; just a few weeks later, volatility had spiked to its highest level in over eight months.
The 30-day bitcoin volatility index courtesy of bitvol.info registered 5.28% on Thursday. The indicator bottomed at 1.02% on Nov. 11, just before the multi-leg selloff began.
At the time of writing, bitcoin was on track for a monthly decline of more than 35%. Prices are down a whopping 79% from last year’s record high.
Long-term holders should be encouraged by the fact that underlying market fundamentals continue to work in favor of bitcoin, not against it. The recent selloff was undeniably linked to the hard fork of bitcoin cash, which divided one of the world’s largest blockchain communities and undermined investor sentiment. However, as Hacked recently reported, the recent wave of selling pressure isn’t deterring major institutions from entering the market. VanEck confirmed on Thursday that the Nasdaq stock exchange will begin offering bitcoin futures contracts early next year, broadening the horizon on digital asset trading. The new futures market will likely be unveiled sometime after Intercontinental Exchange launches its Bakkt trading platform in January.
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.
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