Bitcoin Price Nosedives After Being Rejected at $11,000
Bitcoin’s price was back on the defensive Wednesday, signaling the loss of bullish momentum after being rejected at $11,000 more than 24 hours ago. Its gravitational pull on the broader market saw altcoins and tokens tumble by a combined $3 billion.
The bitcoin price plunged 6.1% to $10,112, according to Bitstamp. In doing so, the largest cryptocurrency relinquished most of the gains it accrued since the weekend and is back to trading below the 30-day exponential moving average (EMA). The 30-day EMA had previously served as a strong support during the bull market.
Bitcoin’s daily relative strength index (RSI) is once again approaching the lowest levels of the year. At 43, the RSI conveys weak underlying momentum.
Bitcoin’s price came within $45 of $11,000 on Tuesday, but failed to overcome that plateau. It began to lose momentum as the session progressed, paving the way for a sharp correction in early Wednesday trading.
At current values, bitcoin has a total market cap of $182.4 billion. The so-called bitcoin dominance rate has risen to 69% as altcoins and tokens continue to lag.
Just under $1.1 billion worth of BTC traded hands on verified exchanges Wednesday, according to Bitwise.
Volatility Hits Three-and-a-Half Month Low
After a highly volatile July, bitcoin’s trading range has narrowed significantly over the past four weeks. The 30-day volatility index, which measures the magnitude of bitcoin’s price changes over that time span, hit 3.26% on Sunday and Monday, according to bitvol.info. That’s the lowest in three-and-a-half months.
The index rose slightly to 3.41% on Tuesday.
For crypto traders, volatility is a double-edged sword. It clearly worked in favor of the bulls during the five-month bull rally that peaked in late June. Volatility also created fraught trading conditions back in November when the entire market tanked.
Contrary to what many people believe, bitcoin’s volatility has declined, not risen, over time. For example, in 2011 bitcoin’s yearly volatility was 16%. By 2018, it was down to 7%. In fact, yearly volatility has been in the single digits stretching all the way back to 2015.
Even during bull markets, the vast majority of bitcoin’s gains occur over a very short timespan when measured in days. That’s exactly what we observed during the 2017 bull market.
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. Chart via TradingView.