Bitcoin Rallies After Quiet Weekend but Low Volumes Limit Breakout
Bitcoin’s price was back on the offensive Monday, as the bulls eyed a return to $10,000 after a weekend of sideways trading. Volumes have picked up significantly over the past 24 hours but remain well below levels seen throughout the year.
The bitcoin price rallied through the early part of Monday trading and was last seen hovering near session highs. BTC/USD rose 1.1% to $9,872 on Bitstamp, the highest since Wednesday.
Bitcoin has returned above the 100-day exponential moving average (EMA), a sign that price action was picking up momentum. The relative strength index (RSI), a leading momentum oscillator, is back at 45 after plunging below 40 last week. When RSI levels approach 30, it means the asset is oversold and due for a correction.
In terms of next major resistance, traders should keep close tabs on $10,250, which corresponds with the 30-day EMA.
Verified spot exchanges processed $564 million worth of bitcoin trades on Monday, according to Bitwise data. Spot volumes plunged to the mid-$300 range on Sunday, levels rarely seen since the bull market began. Binance continues to be the largest spot exchange by volume, as it processed $291 million worth of BTC trades on Monday.
At current values, bitcoin has a total market capitalization of $176.6 billion. BTC dominance has risen sharply in recent hours, reaching 69.5%.
Two-Month Losing Skid
Bitcoin is coming off another losing month in August, as prices fell more than 4%. The summer correction followed five straight months of gains for the leading digital currency.
Since peaking north of $13,800 in late June, bitcoin’s price has corrected 28%. As Hacked reported all the way back in April, major corrections of 30% or more are not uncommon during bull cycles. At current levels, bitcoin is still up more than threefold from its December low.
Some analysts have argued that $10,000 is the new normal bottom for bitcoin, but recent trading activity suggests there may be further downside in store. That’s because bitcoin has carved out a predictable pattern of lower highs stretching all the way back to June. Although bitcoin still has the support of the recent range bottom – i.e., $9,400-$9,700 – it has weakened considerably. As CCN’s Joseph Young recently pointed out, the return of volatility could push BTC/USD all the way back down to the mid-$8,000 level.
Bitcoin volatility has been in perpetual decline since the latter half of July. The 30-day bitcoin volatility index, which tracks the magnitude of bitcoin’s price changes over the past month, was recently as low as 3.26%, according to bitvol.info. It has risen slightly in recent weeks but remains well below 3.5%.
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.