Bitcoin’s Range-Bound Consolidation Continues; Bearish Breakdown Eyed

Bitcoin (BTC) was little changed on Friday, as prices continued to languish near two-month lows following a sizable correction at the beginning of the week. Since the hard fall on Monday, the leading digital currency has shown little signs of recovery as the bears continue to eye the December 2018 low.

BTC/USD Update

The bitcoin price hovered near $3,391 on Bitstamp Friday morning, where it was little changed over the past 24 hours. Factoring market-wide prices, BTC averaged $3,440.01 at the time of writing, according to CoinMarketCap.

Since losing the $3,550 support earlier this week, BTC has shown little recovery potential. A look at the daily chart further confirms this point. The MACD is flashing a sell signal while the RSI shows weak underlying momentum. The bears now have their sights set squarely on the December price floor near $3,122.

Volumes in the last 24 hours exceeded $5.4 billion, with the BitMEX derivatives exchange processing more than 10% of the turnover. The spot market accounted for the remaining 90%.

Bitcoin’s market cap is currently valued at $60.4 billion. It accounts for 53.1% of the entire cryptocurrency market.

The total cryptocurrency market cap stabilized near $114 billion on Friday. Litecoin surged through the crypto market rankings following a 12% price appreciation. Litecoin is now the fourth largest cryptocurrency by market cap, having quickly overtaken EOS, bitcoin cash and Tether.

Bitcoin Volatility in Free Fall

As CCN recently pointed out, bitcoin’s volatility has declined sharply in recent weeks and is currently tracking near the lowest level since November. Although declining volatility is normally associated with stable price trends, for bitcoin it could spell trouble.

Case in point: the sharp drop in volatility in November preceded a monumental plunge in the bitcoin price. Over the span of a month, BTC would fall from a stable $6,500 range all the way down to $3,122. As Hacked continuously points out, an extended period of sideways trading is usually followed by a sharp drop in the bitcoin price.

The bitcoin volatility index recently fell to its lowest level in two-and-a-half months. As of Thursday, the 30-day volatility tracker had edged up slightly to 2.37%, according to bitvol.info. That’s well below the December high of almost 6%.

By most measures, bitcoin will likely re-test the December low in relatively short order. It remains to be seen whether this will open the door to further selling below the $3,000 support. Some analysts have proclaimed that bitcoin could fall sub-$2,000 before the bear market finally runs its course. However, they are in the minority, as most strategists believe that the bottom is likely very near.

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

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