Bitcoin Price Remains Under Pressure Following Midweek Rollover; Dump and Consolidation Continues

The price of bitcoin saw little upside on Thursday, as the leading digital currency remained in limbo following a sharp drop during the previous session. High trading volumes suggest BTC is subject to another large move before the week is over.

BTC/USD Update

The bitcoin price breached the $3,700 floor on Thursday for the second time in as many weeks, reaching a low of $3,688.00 on Bitfinex. The coin traded as high as $3,922.70 before consolidating at $3,847, where it was last spotted. Based on Bitfinex data, that represents a gain of roughly 2%.

CoinMarketCap, which provides aggregate pricing data, shows an average bitcoin value of $3,820. That represents a decline of 2% over the 24-hour period.

Despite the drop, trading volumes remain high, a sign that short sellers had increased their activity following the latest stabilization effort. More than $5.4 billion worth of BTC traded hands on virtual currency exchanges Thursday, up slightly from the previous day. Once again, crypto derivatives platform BitMEX saw the largest share of total activity (27% of the daily volume). BitMEX has emerged as the most popular venue for bitcoin price since the last leg of the bull market because it offers traders an easy way to short cryptocurrencies.

Bitcoin’s market capitalization of $66.5 billion accounts for 54.9% of the total cryptocurrency market, based on latest available data. The cryptocurrency market cap is currently valued at $121.3 billion, roughly $6 billion shy from last month’s swing low.

Dump and Consolidation

As Hacked reported on Wednesday, bitcoin has carved out a new trading range over the past three weeks, as traders continue to sell on consolidation. As one cryptocurrency analyst put it, bitcoin is following a “dump, consolidation, dump” cycle, which means very few traders are entering the long game. This comes despite bitcoin’s favorable price relative to its all-time peak.

That investors aren’t piling in at $3,500-$4,500 suggests further losses are likely over the horizon. Current holders of BTC, including those involved in cost-averaging, should therefore anticipate a further drop in price over the short term. As a recap: BTC/USD bottomed near $3,400 last month and has since come within roughly $300 of that level.

Bitcoin’s volatility index also signals more turbulence up ahead. The 30-day volatility index, as measured by bitvol.info, currency resides at 5.57%. This time last month, the volatility index was below 1.5%. The following chart measures bitcoin’s 30-day volatility index over time. It tracks the standard deviation of the cryptocurrency’s daily open price for the preceding 30-day period.

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.

Author:
Chief Editor to Hacked.com and Contributor to CCN.com, 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