Bitcoin Price Tests $6,400 Support as Volumes Jump

Bitcoin experienced a steady decline on Monday, with prices coming within striking distance of an important psychological support. Trade volumes improved markedly over the weekend but remain well below levels commonly reflective of an active market.

BTC/USD Update

The bitcoin price bottomed at $6,410.00 on Bitfinex, its lowest in two weeks. That came after reaching an intraday high of $6,512. BTC was last seen trading hands at $6,424, where it was down 1% from the previous day. Although bitcoin appears to be defending the $6,400, any rebound is likely to be shallow on account of weak trade volumes.

Dwindling trade volumes continue to place downward pressure on the market. Bitcoin’s daily turnover plunged to around $3 billion last week, setting a new low for the year. Daily trading gradually picked up over the weekend but remained well below recent norms. In the last 24 hours, volumes have rebounded more than 11% to $3.8 billion, according to CoinMarketCap.

At current values, bitcoin has a market capitalization of $111.2 billion. That represents 53.8% of the entire cryptocurrency market cap. Turnover in the broader market, including bitcoin trades on digital currency exchanges and derivates platforms, reached $10.5 billion.

Stable Trading Patterns

Bitcoin’s newfound stability has emerged as a dominant theme in the latter half of 2018. A sharp decline in volatility is both a blessing and a curse for crypto traders who entered the market during the height of the 2017 rally. Crypto entrants have all but disappeared in the last six months as retail traders steered clear of a declining market. It doesn’t look like they’re planning to return anytime soon, based on Google search trends.

Searches for “bitcoin” on Google are the lowest they have been since mid-2017. A further drop from current would place the search term at multi-year lows from the perspective of interest. A similar trend can be observed for other cryptocurrencies as well as important industry buzzwords.

That said, a much more stable bitcoin could serve as a boon for risk-off traders looking to diversify away from stocks, bonds and fiat currencies. Although bitcoin has failed to appreciate in the last six months, it continues to trade independent of the broader market. The monetary policy-geopolitics-economic data continuum that is dragged down equity prices and roiling global bond markets has had no impact on bitcoin.

It remains to be seen whether stable trading ranges will eventually work in favor of bitcoin’s price. Over the last three months, the author has observed that prolonged periods of narrow trading ranges are immediately followed by sharp declines. Each time, bitcoin has found equilibrium roughly at its current price point, though the overall market continues to make lower lows and lower highs.

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.

Chief Editor to and Contributor to, 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