Breakdown of the volume and volatility of the die-hard cryptocurrency
As a trader, I like to practice the stock market trends from time to time, which I have previously broken down, in order to confidently measure how my theories have proven themselves. On the penultimate weekend in February, I mentioned how BTC catapulted above the psychologically significant $ 50,000 mark, hit a record $ 51,735.38, and posted an impressive 430% year-over-year growth. Now, the enigmatic cryptocurrency hit a record high of $ 61,781.83 on March 13, growing 701% year over year. This week I want to take a closer look at the volume, volatility and traders looking for the next possible move from BTC.
Both charts in this article show an important trend that is worth mentioning for the cryptocurrency: positive seasonality towards the end of the year or, put simply, an increase towards the end of the year. This then makes sense, says Schaeffer’s Senior Market Strategist Matthew Timpane, as to why traders are targeting the $ 100,000 level for BTC. Additionally, the currency has a Fibonacci retracement near 361.8% from its 2018 high, and positive seasonality for the rest of April could push Bitcoin above that level.
I also wanted to reiterate the point I made in late February regarding volume and BTC. In particular, it’s easy to notice that the volume of BTC was eerily similar to Schaeffer’s Volatility Scorecard (SVS), which measures the size of stock movement on the chart compared to the options traders priced in over the past 12 months. Looking at recent activity, the 7-day average volume seems to be shifting. Regardless, the increasing volume has usually pushed the price up as this really is a simple story of supply and demand if you think about it.
If there is one concern, it is that volatility has slowed and over the past five years increased volatility has coincided with increased price increases. Before, it was the opposite – at the top of the diagram. So if we look at both volatility and volume versus the previous trend for the virtual currency, we would like the volume to increase again when we expect the price to move towards 100,000.
Bernie Schaeffer’s subscribers Chart of the week received this comment on Sunday April 11th.