Over the last month, bitcoin has seen large swings in price as the bulls scramble to call the bottom and the bears scramble to call the top of the market. The market saw a 50% retracement a few weeks ago, leading the bullish investors to “buy the dip” only to see it quickly top out and retrace again. Volatility is no stranger to bitcoin and the swings have been violent:
Figure 1: BTC-USD, 2-Hour Candles, Macro Trading Range
Zooming out, we can see the market has been bound within a trading range. Continuing from our previous discussions about the potential of a distribution trading range, we can see bounces decreasing not only in volume but in price volatility. These bounces (labeled “LPSY” for “last point of supply”) give us hints as to the ultimate direction this trend might head. The pink dashed line shows a trend of lower highs that are coupled with overall, decreasing volume indicating that not only is demand drying up, but supply is increasing.
When put in the context of the macro trend, bitcoin appears to be consolidating in a sideways fashion: […]