End-of-year volatility: Bitcoin’s latest price action

Currently, Bitcoin’s price action remains firmly below $4,000, which has emerged as a firm resistance area during the latest downtrend period. Bitcoin traded in a more predictable range on Wednesday, as the market stabilised following a series of explosive moves in both directions.

Latest price action

Bitcoin’s price currently sits just above $3,800 after experiencing a $100 drop down to $3,600 followed by a $200 gain over the last 24 hours. The leading digital currency was trading in the $3,800-$3,900 range on major exchanges like Coinbase, Bitstamp, and Gemini over Christmas and Boxing Day. It was trading more than $100 higher on Bitfinex, which normally sees large premiums for BTC/USD. And despite an ominous looking post-Christmas dip, a spike in price over the last couple of hours has seen the price rise from $3,600 to a more optimistic $3,800.

Trading volumes have declined sharply over the last couple of days, reaching $5.4 billion. Daily turnover peaked at higher than $8 billion during the height of last week’s uptrend, which began on the one-year anniversary of Bitcoin’s epic $20,000 run. Bitcoin and other cryptocurrencies then experienced a major drop on Christmas Eve, as markets plunged more than $20 billion from their recent peak.

Not a good Christmas Eve for any traders out there.

The sharp drop wasn’t unexpected – a rapid acceleration in price action is usually followed by a bout of profit-making or consolidation. Since peaking north of $4,300, Bitcoin now finds itself in early December’s price range. Hopefully, we’ll see another spike towards the end of the week.

What about volatility?

Bitcoin’s wild fluctuations of late are reflected in the 30-day volatility tracker available on bitvol.info. The 30-day estimate for the Bitcoin volatility index was 5% as of Christmas Day. This number reflects how much the price of Bitcoin fluctuates over a 30-day period. The volatility index peaked just below 6% last week, the day after Bitcoin began its corrective rally.

Below is a chart showing a three-month view of Bitcoin’s volatility. As the chart illustrates, Bitcoin was experiencing nearly record-low volatility at the start of November, before an explosive move higher in the latter half of the month. The market-wide selloff, which began on the eve of the Bitcoin Cash hard fork, wiped more than $100 billion off the crypto market cap.

Source: bitvol.info

While some analysts believe the crypto bottom of 2018 has already happened, downward pressure on prices will likely persist for the foreseeable future. For Bitcoin, bear market conditions are unlikely to let up as long as prices remain below $4,700. Moving forward, the $4,500-$4,800 region will be the major test for the bulls. Above that region, $5,000 and $5,400 stand in the way of a more sustained rally back toward $6,300, the widely acknowledged break-even point for miners.

Let’s see what the final weekend of 2018 brings!