Market Wrap: Bitcoin Traders Expect Big Move as Volatility Plummets

Bitcoin opened the week still stuck in a price range just above $9,000 Monday, moving less than 0.2% from Friday’s close as of 20:00 UTC (4 p.m. ET), according to Bitstamp.

At 00:00 UTC on Monday (8:00 p.m. Sunday ET), bitcoin (BTC) was changing hands around $9,115 on spot exchanges such as Bitstamp. Despite a brief dip below $9,800 on Saturday afternoon, bitcoin did not trade above $9,200 or below $9,000 on Monday.

Ether (ETH), the second-largest cryptocurrency by market capitalization, climbed less than 1% from its daily open Monday and traded around $226 as of 20:00 UTC (4 p.m. ET).

Exchange inflows from bitcoin miners are pouring in as bitcoin continues to trade in the low $9,000s. A seven-day moving average shows inflows from miners to exchanges have reached their highest levels all year. This might be a bearish signal, according to some analysts.

Miners aren’t really speculators with the bitcoins held on their balance as inventory,” said Austin Storms, founder of mining mobile infrastructure company BearBox They’ll readily sell it for cash to reduce risk or expand operations, he added. But to infer that miners sending coins to exchanges is a bearish market signal, according to Storms, is a “big reach.” 

Miners make up a small percentage of daily sell pressure, he explained. Using this data to justify a bearish market thesis is “exploratory analysis that wants to be confirmatory,” said Storms. “People are bored with the $9,100-$9,400 range and are looking for any reason we might depart from it soon.” 

Bitcoin’s volatility is plummeting as it continues to trade in a tight price range. According to data from Skew, the ether-bitcoin implied volatility dropped to an all-time low over the weekend, and the Bitcoin Volatility Token (BVOL) launched by FTX earlier this year, which tracks market volatility, has fallen for nearly 20 consecutive days.

With volatility at historic lows, CoinGecko research analyst Daryl Lau told CoinDesk he would “definitely not be surprised to see a big move.” Sunday’s brief drop below $9,000 was “bought up on low volumes,” he noted. Cryptocurrency exchange volumes and the continued correlation to the S&P 500, which briefly broke below 3,000 Monday morning, seem to be signalling a “downward move” for bitcoin, Lau said. 

As the market tries to decide which way to exit its current price range, some traders are increasingly frustrated. “Consolidations can be frustrating for short-term traders, particularly those who trade on leverage and attempt to catch breaks,” said Matt Ficke, head of Capital Markets at OKCoin. Bitcoin has closed between $9,050-$9,820 price points for the past seven weeks, according to OKCoin weekly charts. 

To Ficke, the market is “testing or debating whether or not bitcoin can decouple from equity performance in this macro environment.” 

Other markets

Decentralized finance assets were some of the biggest losers on Monday, according to 24-hour price change data from Messari. Compound (COMP), which was “soaring” several days ago, is down 9.5%. Also down are nexo (NEXO) by 3.7%, basic attention token (BAT) 3.26%, and matic network (MATIC) by 2.6 percent. All price changes were as of 20:00 UTC (4:00 p.m. EDT).

In commodities, gold stayed mostly flat on Monday down less than 0.05% as of 20:00 UTC (4:00 p.m. ET). The yellow metal traded around $1,771. 

Meanwhile, major stock indices are mostly green on Monday. 

The FTSE 100 index in Europe gained roughly 1.5% from its daily open at the time of publishing. The S&P 500 also gained nearly 1.5% Monday despite growing fears over an nation-wide increases in coronavirus cases. Only the Nikkei 225 dropped Monday, closing with a loss of more than 1%.