The price of Bitcoin broke out of the $10,570 resistance level,
possibly marking the start of a new range but some traders remain
neutral in the medium term.
The price of Bitcoin (BTC)
increased by 3% in the last 24 hours from $10,322 to $10,680. But BTC
still faces a significant resistance level around $11,000 and has seen
low volatility since Sep. 3.
The declining open interest of the futures market and the stagnant spot market volume raise the probability of low volatility.
Low volume, low open interest and major Bitcoin resistance ahead
Technically, Bitcoin is in a position where it has risen above a crucial level at $10,570,
which has previously acted as a resistance area. However, the
resistance range from $11,000 to $11,288 serves as a roadblock for an
explosive rally.
The daily chart of Bitcoin. Source: TradingView.com
The
confluence of the lackluster open interest and volume, combined with
the major $11,000 resistance level, could cause BTC’s volatility to
remain low for an extended period.
The aggregated open
interest of the Bitcoin futures market declined from $5.7 billion to
$3.8 billion in the past month. The data from Skew shows open interest,
which refers to all long and short positions in the market, has stayed
stagnant.
The spot volume of Bitcoin shows a similar
trend. The spot volume of Bitcoin remained below $500 million for most
of the past month.
Bitcoin futures aggregated open interest. Source: Skew.com
Bitcoin
saw a minor breakout of Bitcoin above $10,500, which traders are
generally optimistic about. Yet, predicting a major price movement in
the near term could be premature for now due to the resistance above.
If BTC reclaims the $10,500 to $10,600 range as a support, the probability of a new range between $10,500 and $11,000 increases.
Historically,
BTC saw extended periods of accumulation and consolidation following a
large rally. A consolidation phase allows futures and options markets to
neutralize, strengthening the basis for the next rally.
What are traders saying?
Meanwhile, a pseudonymous trader known as “The Crypto Monk” said the weekly chart of Bitcoin shows a neutral trend.
The weekly chart of Bitcoin with key macro levels. Source: The Crypto Monk, TradingView.com
The trader outlined Bitcoin’s resilience above $10,000 and the $11,000 resistance in the near term. He wrote:
“BTC
closing the week with a ‘neutral’ candle. But still not the best spot
to start shorting and becoming a bear. Expecting a retest of $11k.”
Cryptocurrency derivatives trader Cantering Clark said BTC has successfully reclaimed a historically important area as a support. Clark noted:
“Kick
yourself if you were selling after a 20% pullback from the highs into
the first test of one of the most significant support and resistance
flips we have had in years. Context is everything.”
Not everyone is on the fence
However, one variable that could inject volatility in the near term is the upcoming Federal Reserve meeting.
Strategists do not expect any hawkish reaction even with positive
economic data and its recently announced Adjusted Inflation Targeting of
at least 2%.
The market tends to drop after optimistic
jobs report because investors fear that the Fed would tighten financial
conditions. This time, the Fed would likely retain a relaxed financial
environment, which would most likely benefit both stocks and Bitcoin.
PlanB, the pseudonymous creator of the stock-to-flow (S2F) indicator also believes Bitcoin is on the verge of a major rally if the S2F model keeps following its historic pattern.
source link : https://cointelegraph.com/news/max-boredom-potential-bitcoin-scenario-with-low-volatility-until-2021
