If investors are hesitant to jump into stocks or bonds right now, is it possible that they will consider Bitcoin as a viable alternative for investment? A recent rise in the price of Bitcoin might lend credence to that idea.
Based on some technical reading, Bitcoin is rising into a new trend on some of its lowest average trading volume. Over the last year, Bitcoin trading volume has decreased drastically. Notice also that last year’s rally happened on declining volume, and the rally gave back all its gains.
Another look at the Bitcoin price action reveals some interesting key price levels derived from volume patterns over the past year. Price by volume study indicate that tallies up trading volume listed at certain prices. The highest volumes tend to represent points of support or resistance. In this chart the support lines are below (red lines), while two other resistance lines sit above the price (yellow and green lines). These levels support a bullish interpretation for Bitcoin’s future price trend by assuming the previous investors have more incentive to see the price move up and thus may buy more to support it.
Additionally, the lower section of the chart shows the implied volatility derived from Bitcoin options. With implied volatility falling to lower levels, it shows that option traders have less fear of falling prices. Together both indications suggest that investors may be digging into their Bitcoin positions and expecting a lengthy stay.