As Bitcoin Metrics Slow Following Bull Run, Analysts Expect Price Climb To Happen Slowly
After hitting $12,500 at the start of the week, Bitcoin’s price has stagnated and dipped slightly.
At the time of writing the leading cryptocurrency is trading hands at $11,733 and is down 1.26%. The currency is also below both its 10-day and 50-day moving averages suggesting the price may slope further down. The slowing rally has caused some commentators to worry that Bitcoin’s price will plunge further, possibly dipping below the $10,000 level.
Metrics from the Bloomberg Galaxy Crypto Index, which is 30% made up by Bitcoin, seem to support that possibility. The index is currently pushing up against the 600 mark, a level where the crypto market has traditionally faced resistance. For the crypto market to continue trading upwards in coming months, it will need to sustain itself above this key level for a sustained period or face a swift rejection.
Spot volumes on Friday, August 21 were also weak standing at $138 million on Coinbase, $41 million lower than the average for the past month. Today Bitcoin also recorded its second-lowest period of 30 day volatility, intotheblock noted in a tweet. The tweet added that the price plunge combined with low volatility is similar to post-halving behavior seen in 2016 before Bitcoin’s historic bull run suggesting the low volatility could be a positive signal for the currency.
While Bitcoin metrics don’t appear particularly strong, several prominent industry figures have speculated that the currency will still rise to great heights, but at a slower rate than some may suspect.
On Thursday, August 20 Bloomberg analyst Mike McGlone noted in a tweet that Bitcoin’s volatility when compared to gold suggests that BTC is tilted towards price appreciation.
“Stuck between 3–9x over the past few years, the price of #Bitcoin per ounce of #gold tilts the crypto toward resuming appreciation, if volatility history tells us anything,” McGlone wrote. “The Aug. 19 cross rate of 6x is the same as in 2017, yet Bitcoin’s volatility has dropped relative to gold.”
Gold’s volatility has been increasing as the dollar reacts to global swings from the COVID-19 pandemic and Congress’ stimulus packages, but Bitcoin’s has been on the decline as the currency stabilized between $11,000 and $12,000.
Volatility in the Bitcoin options market has also been on the decline this week with Bitcoin’s at the money implied volatility — an indicator used to forecast future market volatility — dropping 12%, Skew data shows.
Over-the-counter crypto trader Henrik Kugelberg told Coindesk that he expects Bitcoin’s price to continue to rise over the coming months, even if day-to-day market movements don’t always appear promising.
“I expect a slower curve but would not be surprised if we reach a $15,000 BTC in October and somewhere around $18,000-$20,000 at year end.”
He believes that people will increasingly be looking to swap fiat for crypto as the global economies grow unsteady under the weight of the COVID-19 pandemic.
By Emily Mason
