Godbole’s analysis
Omkar Godpole earlier today analyzed the price movement of bitcoin so far on CoinDesk. Godbole notes that a clear discrepancy has developed between the rising price of bitcoin and trading volumes. This suggests bitcoin’s (BTC) recent rally of around $800 dollars could die out soon.
Bitcoin prices are at the time of his article, 13:24 UTC, up more than 9 percent from the recent lows near $7,500 on June 6. BTC has revived short-term bullish prospects with a move above $8,100 on Wednesday with the follow through positive also. However, trading volumes have yet to pick up indicating that the breakout lacks substance.
Trading volumes
Trading in bitcoin over all exchanges during the last 24 hours stands at $19 billion and that is down 42 percent from the $33 billion high of May 16 according to CoinMarketCap figures. Daily trading volume during the recovery from $7,500 to $8,300 has averaged roughly $18 billion per day. This is much less than the volume of $24 billion on May 30 and $29 billion on June 4.
The numbers from major exchanges show bitcoin’s actual trading volume is not backed up by large numbers. As the Godbole article went to press, BTC was trading at $8,270 on Bitstamp after hitting a high of $8,335 yesterday.
Chart analysis
BTC’s trading volume had consistently been above its 50-day moving average throughout its price jump from $4,000 to $9,000,
However, since June 6 it has been consistently below that average which makes the sustainability of the rally from $7,500 to $8,300 questionable.
The daily chart shows the volume tapering off significantly over the last ten days, with volumes consistently posting lower highs. The volume decline continues even though there was a bearish channel breakout earlier in this week. This is a sign of low investor confidence in spite of the rising price. On Coinbase and Bitfines a similar volume picture emerges.
The bearish trading volume divergences shows that BTC may drop out of the rising wedge pattern. This would confirm an end to the rise from lows near $7,500. This could signal a sell off to $8,000. Any acceptance below that level could lead to a challenge of recent lows near $7,500.
On the other hand should trading volume improve within the next 24 hours BTC could likely rise well above $8,500 validating the falling channel breakthrough on Wednesday.
Present situation
Bitcoin opened 24 hours ago at $8,188 according to CoinDesk data. The high has been $8,728 and the low just $8,172 so the trend has been up most of the day. At 18:45 Central Daylight Time the price was still at $8,704 not far off its high and up $489 on the day. Perhaps the volumes are picking up as there is no sign of a drop as yet. The present price of BTC and the twenty mos important altcoins can be found here. The majority of the major altcoins are also up today.
