In a month where we’ve witnessed a stock market sell-off, the bitcoin market is currently experiencing the lowest volatility for the last 18 months. In fact, for the last two weeks leading up to November, the price was positioned inside a 2.2% trading range. This equilibrium between supply and demand is something that is extremely rarely witnessed in BTC’s long history, but this is something that should change very soon.
Extended periods of price stability often result in a big move to either direction, once a clear direction is made clear. However, the current lack of strong directional bias has both the bulls and the bears waiting on the sidelines. As a result, the crypto community is split between bullish and bearish outlooks in the short term.
A bearish case – The bears argue that cryptocurrency interest is at an all time low. With volatility dropping, the price will only continue to slowly decline, eventually breaking the $6000 support line.
A bullish case – The bulls argue that BTC has now found a bottom, and now accumulation from institutions is taking place, ready for the next big crypto wave.
Open the Floodgates!
Recent news from China has lead many speculators to believe that China’s crackdown on cryptocurrency won’t last for long. In fact, one recent event in China has been welcome news to all BTC bulls – The Shenzhen Court of International Arbitration recently issued a ruling, declaring that there is no prohibition against bitcoin ownership. The decision means that despite the ban on ICOs and virtual currency trading, Bitcoin and other cryptocurrencies are legally regarded as property within that jurisdiction.
In another event, Alder Ashley Ian P, CEO of Hong Kong Securities and Futures Commission commented: “After completing sandbox testing, the commission will grant licenses to compliant cryptocurrency trading platforms”. This major announcement surely means that it’s only a matter of time before the floodgates are opened to allow the Chinese domestic capital to enter crypto.
If we open the monthly BTC chart, this is first time we’ve seen bitcoin close with three consecutive red candles since early 2015. These three candles represent the slow decline in prices seen throughout 2018. However, this has happened before back in 2015. Historical price action shows that the following month saw a slight rise in prices before a large rally four months later that didn’t stop until touching $20,000. Could we be setting up for a repeat year-end melt-up rally?
Article By: Timothy Atkins