Bitcoin looks primed for a move to $8,000, but low trading volumes point to the risk of a bull trap.
The cryptocurrency broke through a key descending trendline (drawn through the May 6 high to the May 21 high) on Sunday, adding credence to last Tuesday’s bullish outside-day candle and signaling a short-term bearish-to-bullish trend change.
However, at the same time, daily trading volume fell 1.77 percent to $4.85 billion, according to CoinMarketCap. Further, rolling 24-hour trading volume currently stands at $4.95 billion – down 22.5 percent from the current quarterly average of $6.38 billion.
Low volume is a cause for concern for the bulls, as it is widely considered a sign that the market is approaching a peak; that is, the rally will be short-lived.
Hence, a slight pullback seen today does not come as a surprise. At time of writing, the cryptocurrency is trading at $7,591 on Bitfinex – down 2 percent from the previous day’s (UTC) close of $7,718.
The bullish outside-day candle followed by a bullish crossover between the 5-day and 10-day moving averages (MAs), and an upside break of the falling trendline, indicate scope for a rally to $8,000…