Bitcoin Rally Loses Steam in Low Volume, Low Volatility Trading

Bitcoin’s price eyed another major breakdown on Monday, as markets re-tested the $10,000 psychological support following a weekend of mostly lateral moves.

While bitcoin has since recovered, it remains well below last week’s high and is quickly losing momentum.

BTC/USD Update

The bitcoin price was last seen trading at $10,243 on Bitstamp, down 1.5% during the session. Earlier, BTC/USD came within $60 of the all-important $10,000 level.

Bitcoin (BTC/USD) resumes reversal trend after failing to break $11,000 last week. | Source: TradingView.

With the decline, bitcoin has fallen back below the 30-day exponential moving average (EMA), a level that provided strong support during most of the 2019 bull market. The daily relative strength index (RSI) has fallen below 50, signaling a loss of underlying momentum.

On the hourly chart, bitcoin’s RSI is has fallen below 40.

Latest volume data from Bitwise show $739.4 million worth of bitcoin trades placed in the last 24 hours, well below the norm. Volumes tend to decline over the weekend before gradually picking up again once the new week begins.

At current values, the Bitcoin network has a total worth of $183.9 billion, according to CoinMarketCap. The cryptocurrency’s market dominance rate has fallen to 69.6%.

Bitcoin: Not as Volatile as It Appears

As a relatively nascent asset class, bitcoin is significantly more volatile than traditional markets like stocks, commodities and even the foreign exchange. But volatility has been declining over the years as adoption continues to grow.

On Saturday, bitcoin’s 30-day volatility index fell to an almost four-month low, underscoring the range-bound nature of today’s market. At 2.23%, the 30-day volatility index was the lowest it had been since May 10.

The volatility gauge rose slightly on Monday and was last valued at 3.23%.

Since peaking in late July, bitcoin’s 30-day volatility index has been in firm retreat. | Source: bitvol.info

As Hacked reported earlier this year, bitcoin’s volatility has declined as its price continues to grow. Since 2011, the largest digital currency has printed higher yearly lows in seven of eight years. Unless bitcoin falls below $3,200 in the next three-and-a-half months, 2019’s yearly low will be higher than the one seen in 2018.

Of course, volatility cuts both ways. A more volatile market makes the gains we saw during the summer more likely. A lack of volatility means less opportunity to profit big from trading bitcoin.

Read: Forget What You’ve Heard: As Bitcoin’s Value Has Risen, Volatility Has Declined

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.

Tags:
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