Bitcoin
$47,058.89-1.09%
Ethereum
$3,385.93-4.48%
XRP
$1.06-1.85%
Cardano
$2.34-2.98%
Polkadot
$33.09-5.20%
Stellar
$0.318481-3.22%
Dogecoin
$0.239295-0.01%
Chainlink
$27.67-6.09%
Uniswap
$24.22-7.01%
Polygon
$1.41+2.19%
Litecoin
$179.55-2.59%
Bitcoin Cash
$617.90-3.08%
Algorand
$1.92-5.95%
Wrapped Bitcoin
$47,150.17-1.07%
Filecoin
$85.81+2.51%
Cosmos
$32.92-8.99%
The Graph
$0.813120-5.23%
Tron
$0.104996-8.77%
Ethereum Classic
$56.57-1.88%
Aave
$355.95-7.01%
Tezos
$6.08-9.42%
EOS
$5.22+4.48%
NEO
$48.58-3.64%
IOTA
$1.70+12.43%
Monero
$260.14-1.36%
BitTorrent
$0.003907-2.73%
Bitcoin SV
$156.26-0.46%
Waves
$28.68-7.47%
Maker
$2,784.41-6.08%
Dash
$198.35-4.22%
Decred
$145.24+1.77%
Decentraland
$0.816759-2.67%
ICON
$1.88-8.04%
NEM
$0.181446-3.55%
Zcash
$134.93-1.78%
Qtum
$12.43-1.85%
NuCypher
$0.323030-1.75%
Bitcoin Gold
$65.36-4.05%
Yearn Finance
$33,051.83-4.52%
OmiseGO
$8.34-4.65%
Basic Attention Token
$0.743730-3.57%
0x
$1.07-5.55%
Paxos Standard
$0.990101-1.02%
Fetch.ai
$0.840564-7.11%
Ren
$0.936744-6.34%
Bancor
$4.02-3.58%
Band Protocol
$9.03-7.36%
Siacoin
$0.018179-3.50%
Kava.io
$6.10-3.80%
Nano
$5.36-5.02%
Loopring
$0.460400-1.78%
Storj
$1.37-3.77%
Civic
$0.541618+1.42%
Lisk
$3.51-2.45%
Numeraire
$43.52-0.98%
Orchid
$0.358314-4.31%
PAX Gold
$1,764.06+0.03%
Augur
$25.90-1.35%
Aragon
$5.77-3.38%
Enzyme
$111.59-6.64%
district0x
$0.170719-2.62%
Kyber Network
$1.80-2.01%
SingularDTV
$0.001559+25.60%
Tether
$1.00-0.02%
USD Coin
$1.00+0.02%
Dai
$1.00+0.00%

Bitcoin Volatility Hits 6.5-Month Low as Price Falls Back to $8,000

Bitcoin's struggle for clear directional bias looks set to end, with volatility hitting multi-month lows and the charts calling a big move to the higher side.

Oct 23, 2019
CoinDesk Insights

View

  • Bitcoin has dropped by $300 in the last 24 hours. Even so, the outlook remains neutral as key Fibonacci retracement support at $7,850 is still intact.
  • Bitcoin's volatility gauge has dropped to the lowest level in over six months. The low volatility period will likely end with a big move on the higher side, as a repeated defense of $7,850 is indicating seller exhaustion.
  • A UTC close above $8,820 is needed to confirm a bullish reversal.
  • A high-volume move below $7,850 would confirm range breakdown. However, an impending death cross, a bearish but contrary indicator, suggests the downside, if any, could be limited around $7,400.


Bitcoin's struggle for clear directional bias looks set to end, with volatility hitting multi-month lows and the charts suggesting a big move could soon occur on the higher side.

The top cryptocurrency by market value has spent a better part of the last four weeks trading the range of $7,800 to $8,400.

A double bottom breakout on Oct. 9 had raised hopes of a move above $9,000. The ascent, however, stalled $8,820 on Oct. 11 following which prices fell back to $7,800.

Further, the cryptocurrency failed to draw bids above $8,300 over the last two days despite the bullish setup on intraday charts and retreated back to $7,920 during the Asian trading hours today.

With the lackluster price action, bitcoin's 60-day daily return volatility, as calculated by Coinmetrics, has dropped to 2.58 percent – the lowest level since April 1.

The volatility gauge topped out above 5.5 percent in July and has been on a steady decline ever since, as seen in the chart below.

An extended period of low volatility often paves the way for a big move on either side.

For instance, the 60-day volatility topped out at 5 percent in early January and fell to 2 percent on April 1 – a day before BTC broke in a bull market with a $1,000 rally to $5,000. Going back further, volatility has bottomed out quite a few times near or below 2 percent.

BTC, therefore, could soon adopt a strong directional bias. The risks are skewed in favor of a bullish move, according to technical charts.

Weekly chart

Bitcoin dived out a contracting triangle in the last week of September, signaling a continuation of the pullback from June's high of $13,880.

The ensuing sell-off, however, ran out of steam near $7,850 – the 38.2 percent Fibonacci retracement of the rally from $3,122 to $13,880 – over the last three weeks.

The repeated defense of the Fibonacci support indicates seller exhaustion. The indicators on the three-day chart are also echoing similar sentiments, as discussed on Tuesday.

BTC, therefore, could see a strong bounce, possibly to levels above $8,820 (Oct. 11 high) in the short term. That would invalidate the lower highs setup on the daily chart and open the doors for resistance at $9,320.

As of now, BTC is changing hands at $7,970 on Bitstamp, representing a 2.8 percent loss on a 24-hour basis.

The outlook would turn bearish if prices drop below $7,850 with strong volumes, confirming a range breakdown.

Even so, a big sell-off, similar to the $2,000 drop seen in September, looks unlikely, and the downside could be restricted near $7,430 (multiple daily lows in early June), as a contrary indicator is about to turn bearish, as seen below.

Daily chart

The impending death cross, a bearish crossover of the 50- and 200-day moving averages, has trapped sellers on the wrong side of the market in the past.

For instance, BTC had bottomed out near $220 with the confirmation of the death cross in mid-September 2015. Notably, the bear trap was formed 11 months ahead of the August 2016 mining reward halving – a price-bullish event.

Interestingly, the latest death cross is happening six months ahead of the reward halving and could mark a bottom in BTC.

Disclosure: The author holds no cryptocurrency assets at the time of writing.

Bitcoin image via CoinDesk archives; charts by Trading View

DISCLOSURE

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Loading...