Bitcoin: USD/BTC (BTC=X) Tests $7K as Spot Trading Volumes Subside to Normal Levels

Bitcoin: USD/BTC (BTC=X) Tests $7K as Spot Trading Volumes Subside to Normal Levels

After weeks of elevated activity, trading volumes on spot bitcoin exchanges have subsided, boding well for some traders if not the venues themselves.

Prices for bitcoin (BTC) climbed less than a percent Tuesday, retracing gains lost the day before when it hit a one-week low, according to CoinDesk’s Bitcoin Price Index (BPI). The price of the bellwether cryptocurrency is above the 10-day moving average on hourly charts, a bullish signal as bitcoin tries to climb back to $7,000 levels.

Bitcoin has been gaining price momentum since 12:00 UTC (8 a.m. EDT), jumping from the $6,800 area, closely touching the $7,000 level, but currently changing hands around $6,900.

This rise comes a day after large, futures liquidation-based sell-offs of $29 million caused prices to slump in early hours trading around 00:00 UTC Monday.

“Yesterday’s drop seemed pretty manipulated but, as we’ve said before, these moves are more likely now as the liquidity has dried up significantly,” said Shayne Heffernan , CEO and Founder of Heffx.

Indeed, bitcoin volumes on USD/BTC exchanges such as Coinbase and Bitstamp have subsided to February levels after enjoying elevated volume in March when a massive sell-off occurred because of coronavirus-related fears. At one point, the price for 1 BTC dipped below $4,000 briefly during heavy trading action on March 12.

Depending on trading strategies, this lower-volume environment can prove beneficial for some market participants. Lower volume means thinner liquidity and can cause prices to swing more often.

“Our options strategies have been outperforming significantly given the crazy volatility environment,” said Mr. Heffernan. The options market is sending bearish signals ahead of bitcoin’s upcoming halving, giving traders like QCP clear indication how to trade in a lower volume spot market.

Despite exchanges reporting interest in bitcoin is increasing, volumes certainly are not, said Vishal Shah, an options trader building a new crypto derivatives exchange called Alpha5.

“Outside anecdotal claims by certain on-ramps that they’re seeing great inbound interest, the trade volume isn’t indicating it, and I don’t necessarily expect this to change on the other side of the halving, without any additional catalysts,” said Shah.

Of course, it’s possible new users are holding their bitcoin rather than actively trading it, or they are buying from exchanges and then trading on a peer-to-peer basis. And to the degree these converts are individuals rather than hedge funds or the like, their trades are less likely to move the needle on exchange volumes.

Technical Indicators

Overall, the bias in prices is: Downwards.

The projected upper bound is: 8,184.07.

The projected lower bound is: 5,464.69.

The projected closing price is: 6,824.38.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 20 white candles and 30 black candles for a net of 10 black candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 40.7824. This is not an overbought or oversold reading. The last signal was a buy 33 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 49.66. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 27 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -37. This is not a topping or bottoming area. The last signal was a sell 5 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 25 period(s) ago.

Rex Takasugi – TD Profile

FOREX BTC= closed up 4.060 at 6,874.450. Volume was 67% below average (consolidating) and Bollinger Bands were 43% narrower than normal.

Open     High      Low     Close     Volume___
6,868.7006,956.1506,809.3006,874.450 136,575
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 7,036.33 7,073.94 8,038.10
Volatility: 68 134 82
Volume: 349,693 580,164 232,876

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

FOREX BTC= is currently 14.5% below its 200-period moving average and is in an upward trend. Volatility is low as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume into BTC= (mildly bullish). Our trend forecasting oscillators are currently bullish on BTC= and have had this outlook for the last 13 periods.

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