Bitcoin Price Eyes Breakaway, According to RIG Trend Lines
Bitcoin’s price targeted new weekly highs on Friday after a Bloomberg report suggested significant upside is on the horizon. The price bump followed an extended period of broadly consistent trading ranges for the digital currency.
The bitcoin price broke out of a narrow trading range on Friday, reaching a high of $6,826.40 on Bitfinex. The leading digital currency was last seen trading at $6,660.10, having gained 2.5% over 24 hours. The sharp and sudden rally pushed prices into overbought territory on the hourly chart, which prompted an immediate reversal.
Daily trading volumes surpassed $5 billion for the first time in almost a week. Turnover in BTC reached $5.2 billion on Thursday.
Cryptoassets as a whole added more than $7 billion in market cap over the last 24 hours following a sharp spike in trading volume. At press time, the total market was valued at $221.1 billion based on daily trade volumes of $17.9 billion, according to CoinMarketCap.
Bitcoin’s share of the overall market is back above 52%. Bitcoin’s contribution to the total market cap approached 60% earlier this month as altcoins and tokens plunged.
Bitcoin and RIG Trend Lines
Bloomberg’s Vildana Hajric believes bitcoin could be on the cusp of a major breakout in the not-too-distant future. The positive outlook is based on an evaluation of RIG trend lines, which combine the Relative Strength Index (RSI) and momentum studies to gauge an asset’s future trajectory. According to the study, the momentum indicator has crossed the RSI, putting bitcoin on track for bigger gains.
As Hajric notes, bitcoin’s rose the last three times the two indicators crossed. The following chart, courtesy of Bloomberg, illustrates the crossover based on a bitcoin spot price of $6,503.84.
The last time the crossover occurred was in mid-August, which sparked a 21% rally in the bitcoin price over a three-week stretch.
Bitcoin’s intermittent breakouts usually follow an extended price squeeze that can be attributed to the currency’s declining volatility. The bitcoin volatility index has declined to 2.58% over the past 30 days, compared with 4.34% over the past 252 days, according to bitvol.info. The volatility index captures how much the price of bitcoin varies over time using the standard deviation of the daily open price over a specified period.
As the following chart illustrates, bitcoin’s volatility has been in sharp retreat since mid-August:
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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