Bitcoin in Re-Accumulation Phase, Volatility Hits Two-Year Low
Over the weekend, the price of Bitcoin started moving north, making its way from around $10,400 to above $10,700. Trading in the green currently, but the ‘real’ volume at just $824 million is not providing confidence.
While volume on spot exchanges is low, institutional interest in Bitcoin has been “flashing strong since the 27th of July, the day it went through $10k.”
Also, just a small percentage of greens have been enough to carry the rest of the crypto market up with it. In a rare bout of gains, XRP spiked over 8%.
This positive performance across the markets is the result of President Donald Trump’s recovery after contracting coronavirus.
The market is trying to recover from the BitMEX incident last week. As a result of criminal charges on the popular derivatives platform, more than 45,000 BTC have been pulled from the exchange.
Bitcoin balance on BitMEX has fallen to 120,000, a decline of 27%.
The day the news of criminal charges from CFTC came, the exchange saw the largest negative net flow to date, as 44,000 BTC were withdrawn. Almost 30% of them were transferred to Binance and Gemini in equal amounts.
Open interest, meanwhile on the exchange that crashed 24% remains at 43k BTC, around $456 million — levels not seen since May 2020.
Besides BitMEX, another narrative at the top of the market’s agenda is the volatility the market participants will be subjected to in the coming weeks ahead of the US elections.
Getting Too Comfortable?
Bitcoin’s 180-day volatility has dropped to its lowest since November 2018, reaching a 23-month low, indicating the market has been mostly unfazed by the unsettling news of BitMEX. Denis Vinokourov of Bequant noted,
“Implied vol remains well contained and even the skew profile, for both Bitcoin and Ethereum, shows signs of stabilization. The market is very crowded, and it is difficult to see how this will change, especially as the entire liquidity provision is dependent on cheap liquidity (Bitcoin) and yield offerings by DeFi platforms (with Ethereum as the backbone).”
During these last couple of weeks, Bitcoin weathered the several negative news that otherwise would have crashed the digital asset’s price — first KuCoin hack losing $281 million customer funds then BitMEX, and the next day the news of Trump testing coronavirus positive. Trader and economist Alex Kruger said,
“It's been impressive how little bitcoin has moved during this whole Trump ordeal, as well as during the Bitmex-CFTC news. Vol sellers getting too comfortable.”
$BTC. I've been asked for a bigger picture analysis.
Looks like we are in re-accumulation phase, above the weekly 21-EMA.
Possible breakout by end 2020. pic.twitter.com/GKUIs4n0Hw
— Wolf (@IamCryptoWolf) October 4, 2020
This could also mean that bitcoin is in re-accumulation mode. Analyst Cole Garner notes,
“Binance with a 2800 BTC sellwall at $11k. Unstoppable force meets the immovable object. Welcome to re-accumulation.”