Analysis
As Bitcoin volatility drops, here’s what you can expect next
Low volatility meant that a sharp movement to either side was possible in search of liquidity before a reversal- and 29 August was a good example.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- Bitcoin retraced all its recent gains and showed bears remained dominant.
- A BTC drop below $25k could lead to further massive losses across the crypto market.
Bitcoin [BTC] has a bearish market structure on the 1-day chart. The higher timeframe chart here was the weekly, which showed BTC bulls clinging desperately on to the $25k support zone. A drop below $24.8k would flip the HTF structure and the king could fall toward $20k again.
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against the SEC saw a rise in interest from whales. At the same time, miners are facing cost pressures, but the miner reserve outflows have leveled out over the past week. Nevertheless, it does not rule out forced selling from the miners to cover costs.
Bitcoin was trading at a must-defend zone for the bulls
Source: BTC/USDT on TradingView
The cyan box at $25k represented a bullish order block on the daily chart. This block spanned from $24.8k to $26k. From mid-June, BTC has traded within a range that reached from $24.8k to $31.8k.
The $25k area served as resistance in February and March this year. Therefore, their retest as support is a significant event, and a fight that the bulls need to come out on top. A 1-day session close below $24.8k would likely be a signal that bulls are exhausted and Bitcoin was preparing for a drop to $20k, the next area of interest on the daily chart.
The OBV did not see notable movement due to lowered volume since April, but the lower timeframes showed that the OBV has trended downward since mid-August. The RSI was in agreement with the price structure and showed a bearish trend has been in progress since 24 July, when there was a bearish market structure break on the D1 chart.
Such lowered volatility meant that a sharp movement to either side was possible in search of liquidity before a reversal- and 29 August was a good example. The gains from the Grayscale news were wholly retraced, a sign that bulls have little say in the market.
The rising mean coin age offered some hope to beleaguered bulls
Source: Santiment
The MVRV ratio was negative in recent weeks and pointed toward an undervalued Bitcoin. However, it was unclear if the selling pressure has come to an end. The age consumed metric saw a few spikes over the past two weeks, and suggested sellers had the upper hand.
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Conversely, the mean coin age has trended higher since late July, even though Bitcoin saw a large drop in August. This was a signal that long-term buyers preferred HODLing.
Although it was encouraging, it does not mean an uptrend is imminent. Instead, it’s a sign that investors with long time horizons shouldn’t focus too much on price action.
