Bitcoin Weekly Forecast: BTC volatility drops to a year low, get ready for a spiral drive


  • BTC/USD has spent another week in a tight channel.
  • Violent moves may be ahead once the channel is broken.
  • The critical support is created by weekly SMA50.

The week was tough for the cryptocurrency markets confined to tight ranges. Bitcoin has lost 1% of its value during the recent seven days with the trading range limited by $9,298 on the upside and $8,933 on the downside. BTC is heavily bought on the dips below $9,000, which is a positive technical signal. However, the lack of upside momentum should put traders on guard, as it means that the bulls are not confident enough to push the price much higher. 

Bitcoin's market capitalization reached $167 billion, while an average daily trading volume is over $15 billion. Over 70% of Bitcoin holders are making money at the current price, and only 23.8% of them are in red. A cluster of nearly 2 million addresses holding over 1.3 million BTC has a breakeven point in the range from $9,214 to $9,577. No wonder that BTC bulls have a hard time pushing the price above this area.

Bitcoin's on-chain data

According to Intotheblock data, the 47 addresses purchased over 1% of the volume purchased within 24 hours and 46 addresses were registered as large sellers. It means that the market sentiments have tilted to the bullish side; however, it has not been reflected in the price momentum as yet.

Also, an average Bitcoin wallet balance settled marginally above $5,000 and barely changed since the beginning of May. The volatility topped at $136.96 on April 10 and has been declining ever since. By the time of writing the 30-day volatility dropped to 26.38%, which is a historical low.

The declining volatility may be depressing for speculative traders; however, the experts see it as a sign of market maturity. The Bloomberg analyst Mike McGlone believes Bitcoin has been in transition from speculative asset to a store of value.

Volatility should continue declining as Bitcoin extends its transition to the crypto equivalent of gold from a highly speculative asset, yet we expect recent compression to be resolved via higher prices, he wrote recently on Twitter.


BTC/USD: Technical picture

On a weekly chart, Bitcoin (BTC) has a chance to print the first green candle in more than a month and halt a period of four weeks of consecutive losses. While the market is still lethargic, this is a long-awaited positive signal that the market may be moving towards the bullish breakthrough.

The critical support is still created by weekly SMA50 currently at $8,650. This technical level has served as a backstop for Bitcoin bears since the beginning of May. The MA points downwards, which means the market may drift lower; however, as long as the price stays above this level, the chances are that BTC will break from the current range to the upside. 

If the above-said critical support is cleared, the sell-off may be extended towards $8,300 (the middle line of the weekly Bollinger Band and to psychological $8,000. However, even stronger support is created by weekly SMA100 on approach to $7,300.  A sustainable move below this area will negate the long-term bullish potential.

The RSI on a weekly chart is mostly neutral, with a mild bearish bias.  Consequently, BTC/USD may stay sidelined unless something unexpected happens.

BTC/USD weekly chart

The daily chart confirms the range-bound nature of Bitcoin's movements. The short-term recovery is capped by the daily SMA50 at $9,400 with the middle line of the daily Bollinger Band located on approach. BTC/USD has been trading below this MA for nearly three weeks now. The local support is created by the lower line of the daily Bollinger Band at $8,950 with the next focus on psychological $9,000 followed by the above-mentioned weekly SMA50 at $8,650. 

On the upside, a sustainable move above the recent channel resistance at $9,400 will help to mitigate the bearish pressure and improve the short-term technical picture. Once this happens, the recovery may be extended towards  the upper line of the daily Bollinger Band at $9,700 and psychological $10,000. 

BTC/USD daily chart

The Forecast Poll has barely changed since the previous week. The market sentiments are a mixed picture, which is no wonder as the price has been sitting in a tight range. The  weekly  forecast switched from bullish to bearish, while monthly forecast stayed bullish. The quarterly forecast turned from bearish to neutral . The expected price is below $10,000 on all time frames. However, the quarterly expectation recovered above $9,000. It means that the market participants do not believe in a sustainable recovery in the foreseeable future.

 

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