Bitcoin prices have been trading within a relatively tight range lately, experiencing minimal volatility as market observers wait for the next major catalyst to drive the cryptocurrency higher or lower.
The digital asset started moving primarily between $7,200 and $7,800 late last month, narrowing to a smaller range of roughly $7,200 to $7,400 on November 30th, CoinDesk price data shows.
The cryptocurrency has been experiencing this relative calm as it follows a broader, downward trend, during which it has repeatedly notched lower highs, additional CoinDesk figures reveal.[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
“Bitcoin is in a general downward trend with temporary technical bounces from oversold price points,” said Joe DiPasquale, CEO of cryptocurrency hedge fund manager BitBull Capital.
“The upcoming holiday season may also result in thinning volumes, adding further pressure on the price,” he added.
“Meanwhile, investors have adopted a wait and watch approach to see if any market catalysts help conclusively drive the market in a particular direction,” concluded DiPasquale.
While bitcoin has managed to stay within a reasonably defined range over the last several days, it has also been displaying some bullish technical signals, giving market observers hope that it may experience a positive breakout soon.
Mati Greenspan, founder of the newsletter Quantum Economics, weighed in on these developments, helping shed some light on the situation.
“Over the last week, technical indicators have shown signs that a reversal may be in the cards soon,” he stated.
“At the moment, sentiment and volumes are at the lows. A strong push past the $8,000 [level] could very easily open the way back to the recent highs of $14,000,” said Greenspan.
At the same time, Greenspan emphasized the limited nature of relying on technical analysis, noting that “past performance is not always an indication of future results.”
Adam Vettese, an investment analyst for eToro, also weighed in, stating that “the technical picture is encouraging but not conclusive.”
“The price action still has a little bit further to go to reverse the long-standing downtrend,” he added, “so I would want to see a bit of a stronger reversal first.”
Crypto investors have been particularly bullish or bearish, according to sentiment figures provided by cryptocurrency analytics platform TheTIE.io.
“From a short-term point of view Bitcoin sentiment is very flat,” Joshua Frank, cofounder of TheTIE.io,” said yesterday.
“Tweet volumes today are below average and daily Bitcoin sentiment is sitting right around 54% (neutral),” he added.
The chart below depicts the relationship between price, daily sentiment and tweet volume:
Bitcoin prices, sentiment data and tweet volume.
“There is nothing to suggest a strong upwards movement is coming from a purely sentiment point of view,” said Frank.
‘Waiting For What’s Next’
Considering the widespread malaise affecting the bitcoin markets, Marouane Garcon, managing director of crypto-to-crypto derivatives platform Amulet, summed up the mindset of many traders, investors and analysts.
“I think that we’re all waiting for what’s next,” he stated.
“I think the market needs more utility,” added Garcon.
He mentioned decentralized finance, describing it as “an exciting sector that’s experiencing great growth and it has a great use case.”
“There needs to be a reason or several reasons for people to get excited about crypto again,” said Garcon.
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether and EOS.