Even those who have been in the cryptocurrency space for some time are still in disbelief at how quickly Bitcoin rose from $ 3,000 to a new all-time high in the same year.
But despite what the world sees as the biggest wave in FOMO in crypto, this is not reflected in the volume on the Coinbase BTCUSD charts. What exactly does this mean and is this a sign that the interest is not quite there yet, or is a huge burst just days away from the volume supported?
Bitcoin is trading just below its all-time high as the market prepares for the next move
Bitcoin is traded at just under 20,000 US dollars for an eternity in the crypto era. Since the cryptocurrency is notorious for its volatility and wild fluctuations in price, the stability, especially below an all-time high, is scary and confusing.
Virtually every crypto market participant expected that Bitcoin would withdraw $ 20,000 and never return once it got there. And while FOMO is mostly back in crypto, the top cryptocurrency has yet to take the key level out. But it didn’t correct either, despite the fact that almost every technical indicator shows alarmingly overheated conditions.
There are also fundamental buy signals that have historically been incredibly profitable. The combination of bullish fundamentals and ultra-bearish short-term technicals has mixed analysts everywhere.
Some of the most famous dealers, including Peter Brandt and John Bollingerboth recently warned of an impending correction – a correction that has not yet arrived. Elsewhere there are few areas where analysts and investors can search for information about the market. And because the volume should precede the price, our search began there.
The Crypto Exchange Coinbase volume does not yet reflect the Bull Run Breakout
“The constant buying from Coinbase for the past two months has been relentless.” Reads a tweet from Bitcoin expert Charles Edwards. Edwards created the Hash Ribbons signal mentioned above in reference to its excellent reputation for profitability.
“OG whales” are said to have erected selling walls on the exchange in the hope of stopping any further progress, but the cryptocurrency has prevailed.
All of this buying talk would point to an increase in trading volume on Coinbase, right? Not correct.
Trading volume on Coinbase has been abysmal despite "relentless" buying and soaring prices | Source: BTCUSD on TradingView.com
The timeframe with the longest stretch of green candles and the most overheated indicators nowhere near the level of purchase when Bitcoin was much cheaper – with a price below $ 5,000.
The sharp move on Black Thursday caused many sellers to capitulate, but buyers took advantage of the discount on the first cryptocurrency more visibly. The volume in this move is at least twice that of the recent rally.
Trend changes or continuation typically show breakout volume | Source: BTCUSD on TradingView.com
If you focus on the bear market and rule out most of 2020 when the trend changes or breaks out, the trading volume is read considerably. The 2019 rally had increasing volume at each peak, which helped push Bitcoin to its yearly highs.
This just doesn’t exist in the current rally, but the reasons for it may not be as clear as the lack of breakout volume. For one, institutions don’t buy from Coinbase and could have the biggest impact on price increases. Wealthy buyers get their BTC in OTC markets so as not to move the price as much when making their massive purchases.
There is also far less BTC on exchanges like Coinbase to trade or sell these days. While “buying” might have been “relentless” because there aren’t that many sellers, price goes up without the volume to support it.
Weak volume with the largest candle being red is a negative sign | Source: BTCUSD on TradingView.com
However, this is usually a dangerous situation if the volume doesn’t arrive soon. Currently the largest 3-day volume during the recent rally is red, suggesting that this may have been a reversal and that sellers have taken control.
The opposite can be seen on Black Thursday, where after the initial surge, the volume of purchases skyrocketed as people bought BTC as cheaply as possible.
Falling or sub-par volume that is not in line with price movement can signal a reversal. Is it what’s going on right now, or has the entry of institutions just clouded things over so much that it is now difficult to judge the market based on traditional technical data like volume or indicators that seem to constantly fail to represent the cryptocurrency ?
Featured image from Deposit Photos, Charts from TradingView.com