Bitcoin Unable to Break Mundane Trading Range as Bearish Grip Tightens

Bitcoin drifted slightly lower on Monday, as the bulls struggled to break a mundane trading range that has kept prices capped below $3,500.

BTC/USD Update

Bitcoin drifted within a narrow range at the beginning of the week, with aggregate prices fluctuating between $3,442.59 and $3,483.69, according to CoinMarketCap. At the time of writing, the BTC/USD exchange rate saw an average price of $3,452.78, down 0.8% from Sunday.

On individual exchanges, bitcoin traded from as low as $3,407 on Bitstamp to a high of $3,485 on Bitfinex. The following chart, which reflects Bitstamp data, shows the extent to which price action has deteriorated over the past two months. As the chart shows, bitcoin has fallen below the 50-period moving average on the daily timeframe.

The leading digital currency risks a bigger fall in the near term unless the bulls can stage a convincing rally back above $3,550. This long-term inflection point has been tied to bitcoin’s recovery potential during the recent leg of the bear market.

At current values, bitcoin has a total market capitalization of $60.5 billion. That represents 53.3% of the entire cryptocurrency market. In early November, the original blockchain was worth more than $110 billion.

Relevant: Bitcoin Volatility Recedes as Bear Market Reaches 411 Days.

Volumes Rise, Volatility Falls

The downward drift on Monday was accompanied by a notable rise in trading volumes. Over the past 24 hours, BTC trade volumes have risen by more than $300 million to nearly $5.3 billion, according to CoinMarketCap. Bitcoin has exhibited higher than normal volume over the past 30 days, which reflects a large uptick in circulation since the summer. This trend intensified in the fourth quarter as long-dormant accounts became active again. Much of this activity has been tied to bitcoin whales, or large holders of the cryptocurrency. More on this story: Bitcoin Likely Headed Lower as Whales Activate Long-Dormant Accounts.

Bitcoin’s circulating supply usually has a direct impact on volatility, or the extent to which the asset fluctuates in price. However, this hasn’t been the case in recent weeks. The 30-day volatility index for bitcoin has declined steadily since mid-December, which was right around the time that the market was recovering from its most recent swing low.

As of Sunday, bitcoin’s 30-day volatility index was 2.66%, little changed from the previous day. The volatility gauge peaked near 6% on Dec. 18.


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