Market Wrap: Bitcoin Bounce Pauses on Low Volume

Buyers are taking a breather, awaiting a catalyst that could push prices higher or lower.

Feb 2, 2022 at 9:21 p.m. UTC
Updated Feb 3, 2022 at 2:28 p.m. UTC

Damanick is a crypto market analyst at CoinDesk where he writes the daily Market Wrap and provides technical analysis. He is a Chartered Market Technician designation holder and member of the CMT Association. Damanick is also an equity/fixed income portfolio manager and does not invest in digital assets.

Angelique is a market contributor at CoinDesk.

Bitcoin (BTC) traded lower on Wednesday after a brief price bounce over the past two days. Buying activity has been weak following the January sell-off, which is why some analysts remain uncertain about BTC's short-term price direction.

Market indicators such as volatility and trading volume remain low, indicating a lack of conviction among crypto buyers and sellers. "Bitcoin’s seven-day volatility is now at the lowest level since November 2020," Arcane Research stated in a report. The firm expects short-term rises in volatility to remain limited as BTC trades in a tight range.

Still, a BTC breakout above $40,000 or breakdown below $30,000 could be a catalyst for a surge in trading activity.

"Since the early November peak, there have been four marked, step-like drops in the crypto market," FundStrat, a global research firm, wrote in a Wednesday briefing. "After each drop there has been a recovery averaging 8.9% leading into the next drop. A noticeable difference between the current recovery and the previous ones is the volatility," FundStrat wrote.

The firm noted that during the past three price recoveries bitcoin had an average true range (ATR, a volatility indicator) of 151, but the current recovery's ART is only 109.

Latest prices

Bitcoin (BTC): $37557, −2.55%

Ether (ETH): $2724, −1.56%

S&P 500 daily close: $4589, +0.94%

Gold: $1807 per troy ounce, +0.34%

Ten-year Treasury yield daily close: 1.77%


Bitcoin, ether and gold prices are taken at approximately 4pm New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information about CoinDesk Indices can be found at coindesk.com/indices.

Ether outperforms bitcoin

Ether (ETH), the second-largest cryptocurrency by market capitalization, is starting to outperform bitcoin. The chart below shows a series of higher relative price lows in the ETH/BTC ratio since July 2020. The next level of resistance in ETH/BTC is at 0.08, a significant barrier which could limit additional upside in ETH relative to BTC.

CoinDesk - Unknown

ETH/BTC price ratio on daily chart shows support/resistance with RSI on bottom (Damanick Dantes/CoinDesk, TradingView)

Altcoin roundup

  • Solana Pay ushers in a new payments era: Solana Pay, a decentralized, open and peer-to-peer payment protocol, was launched Tuesday. It aims to pave the way for a future where digital currencies are prevalent and digital money moves through the internet like data – uncensored and without intermediaries taxing every transaction. The company says the protocol provides a specification that allows consumers to send digital dollar currencies, such as USDC, from their wallets directly into a merchant’s account, settling immediately with costs measured in fractions of a penny. Read more here.
  • Sushi 2.0: SushiSwap is advancing into Sushi 2.0 with plans for some key improvements and product releases this year. Developers are aiming at three overriding goals: scalability, sustainability and efficiency – key factors even prevalent tokens are having difficulty balancing. Read more here.
  • Cardano developers propose block size increase: Input Output, the development company behind the Cardano network, proposed increasing the network's block size by 11% on Wednesday. The proposal will increase block size by a further 8 KB, taking it from 72 KB to 80 KB, according to CoinDesk’s Shaurya Malwa. Read more here.

Relevant news

Other markets

Digital assets in the CoinDesk 20 ended the day lower.

Largest gainers:

Asset Ticker Returns Sector
Internet Computer ICP +10.2% Computing
Ethereum Classic ETC +2.5% Smart Contract Platform
Algorand ALGO +1.3% Smart Contract Platform

Largest losers:

Asset Ticker Returns Sector
Solana SOL −5.2% Smart Contract Platform
Cosmos ATOM −4.4% Smart Contract Platform
Stellar XLM −3.8% Smart Contract Platform

Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive, and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.

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Damanick is a crypto market analyst at CoinDesk where he writes the daily Market Wrap and provides technical analysis. He is a Chartered Market Technician designation holder and member of the CMT Association. Damanick is also an equity/fixed income portfolio manager and does not invest in digital assets.

CoinDesk - Unknown

Angelique is a market contributor at CoinDesk.

CoinDesk - Unknown

Damanick is a crypto market analyst at CoinDesk where he writes the daily Market Wrap and provides technical analysis. He is a Chartered Market Technician designation holder and member of the CMT Association. Damanick is also an equity/fixed income portfolio manager and does not invest in digital assets.

CoinDesk - Unknown

Angelique is a market contributor at CoinDesk.

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