Bitcoin: USD/BTC (BTC=X) Greater volatility isn’t attracting liquidity providers

By December 9, 2019Bitcoin Business
Click here to view original web page at www.livetradingnews.com
Bitcoin: USD/BTC (BTC=X) Greater volatility isn’t attracting liquidity providers
AddThis Sharing Buttons Share to Facebook Share to Twitter Share to Print Share to Email Share to More

Bitcoin: USD/BTC (BTC=X) Greater volatility isn’t attracting liquidity providers

As the chart above shows, BTC/USD bid-ask spreads tend to widen in periods of high volatility. That’s normal, as market makers seek to profit from investors’ fear and greed. Compared with the second half of 2018, this year has been bumpy for bitcoin: the 30-day volatility of daily returns has topped 4 percent on 65 days in the past 12 months. It’s fallen below 1 percent on just six days in the same period. The data is from data.bitcoinity.org.

Liquidity providers are not rushing in. To measure market makers’ enthusiasm for bitcoin, we turn to network data: the aggregate balances of exchange wallets, as a percentage of bitcoin’s total supply. This measure of exchanges’ bitcoin flows shows some responsiveness to volatility. Year-to-date highs were set in late May and early July, when volatility was on the rise and peaking, respectively.

However, those points stand out in a flat sea: exchanges’ bitcoin wallet balances haven’t changed much since declining in 2018, holding around 8 percent, a point first reached in mid-November, 2017.

Weekly percentage of bitcoin total supply held on exchange vs time, January 2017-October 2019

Labeling wallets is an inexact science. Exchanges’ activities on the bitcoin network tend to follow predictable patterns, indicating net inflows. However, large balances often move in unpredictable ways and it can be difficult to distinguish the flow of capital from a change in custodial practice. This wallet labeling data is provided by IntoTheBlock.

Conclusion

As the end of 2019 approaches, bitcoin appears to be in stasis. Markets are no more liquid than they were, this time in 2018 – still an order of magnitude less than bitcoin’s blue-chip equivalents on the US stock market.

The path out of this stasis is murky. Bitcoin’s volatility has increased, while the percentage of bitcoin engaged in the market has remained flat. If stability and liquidity are part of bitcoin’s road to becoming a more mature asset, the year 2019 has been a period of arrested development.

Technical Indicators

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

The projected upper bound is: 8,295.69.

The projected lower bound is: 6,678.09.

The projected closing price is: 7,486.89.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 19 white candles and 31 black candles for a net of 12 black candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 63.3756. This is not an overbought or oversold reading. The last signal was a sell 8 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 43.79. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 12 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 44. This is not a topping or bottoming area. The last signal was a buy 13 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 10 period(s) ago.

Rex Takasugi – TD Profile

FOREX BTC= closed up 33.480 at 7,501.790. Volume was 58% below average (consolidating) and Bollinger Bands were 53% narrower than normal.

Open     High      Low     Close     Volume___
7,530.7007,566.5007,374.5707,501.790 34,028
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 7,405.08 8,255.54 9,384.91
Volatility: 29 63 75
Volume: 92,759 81,134 85,692

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

FOREX BTC= is currently 20.1% below its 200-period moving average and is in an downward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of BTC= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on BTC= and have had this outlook for the last 25 periods. Our momentum oscillator has set a new 14-period high while the security price has not. This is a bullish divergence.

As the […]

Leave a Reply