Bitcoin Price Risks Further Downside After Piercing Below $6,300

Bitcoin’s price rebounded from two-week lows on Tuesday, though recent price action shows potential for further breakdown ahead. The leading digital currency continues to exhibit weak underlying volatility, which means that the next move will be a slow grind as opposed to a volatile swing.

BTC/USD Update

The bitcoin price reached a low of $6,341.40 on Tuesday, according to the latest pricing data provided by Bitfinex. According to CCN, bitcoin’s actual value is closer to $6,250 once we remove the premium on BTC/USDT transactions. The impact of the premium was on display earlier this month when Tether’s price imploded, dragging USDT sharply below parity. During that selloff, bitcoin was priced much higher on Bitfinex and other exchanges with high USDT turnover.

On Monday, bitcoin bottomed near $6,200, its lowest in two weeks. The decline has been followed by only a minor bounce, which suggests that the bears may attempt another selloff in order to breach new lows. Trading volumes have picked up to around $4 billion as a result. Derivatives platform BitMEX was once again the most popular venue for BTC transactions. Over the last 24 hours, the platform has processed more than 16% of bitcoin trades on global exchanges. Bithumb and Coinbit are second and third, respectively.

At present values, bitcoin has a total market capitalization of $110 billion, according to CoinMarketCap. The coin’s share of the overall market in recent days has improved to 54.1%, according to the latest available data.

Falling into Demand

The recent skid in bitcoin’s price is largely a symptom of technical trading, as markets rebalanced following weeks of tepid moves. This period was characterized by unusually low volumes, with bitcoin’s daily turnover plunging to the lowest levels of the year.

A renewed slide in BTC would likely trigger a relief rally as prices approach a key demand area around $6,100. Below that level, the bulls are likely to find reprieve at $6,000, a psychological and fundamentally-driven support zone. These levels have held up remarkably well since August, which was the last time bitcoin set a yearly low.

Bitcoin’s volatility index will likely increase this week following the latest moves, though the underlying trend shows stable market conditions. As of Monday, the 30-day volatility index for BTC was 1.45%, according to bitvol.info. The 60-day volatility index is 2.08%.

One factor to keep in mind is the expiration of CME’s November bitcoin futures contract. The last day of trading for the November contract is Thursday. As Hacked previously reported, bitcoin’s price tends to fall into futures expiration. The current futures contract offered by competitor CBOE is due to end Nov. 14.

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