For bitcoin (BTC) traders looking for lucrative opportunities, this May was the one to sell and go away.
We are undergoing one the longest stretches of flat trading since last September, when BTC prices held tight between $115 and $130- a range on the scale of 12.5% of its mid-point. Immediately thereafter, it proceeded on a 6-week rally seeing it reach record highs.
This time around, the range is even more narrow. Since whipsawing from $340 to $550 following the latest drama emanating from China, BTC has settled comfortably around $440. It has remained in a holding pattern around that level for nearly a month. On BTC-e, its high is $450, the low is $410. It has spent little time near those extremities, instead gravitating toward $430-440. Its trading range is but 9.3% of the mid-point.
On the average day, there is in fact no more than a movement of 1.5%, which is less than many stocks not considered as habitually volatile. Up until 12 hours ago, BTC moved by little more than $1 (between $439 and $440) for 3 days straight- a volatility of 0.25%.
Volume has also been trending lower, with only 2000-3000 BTC exchanging hands on BTC-e per day.
For short term traders, it is torturous. There are few buying opportunities and not much money to be made. Those looking to emerge from a losing position grow frustrated by the lack of progress. Even with specialized bots better equipped to trade under these conditions, the magnitude of available profit is simply a fraction of what it used to be. Some have commented:
“you all are waiting for a pump , if everybody do that we are stuck on this price and it will never go higher”
“not much to do in an eight cent range in LTC wow”
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For Chinese traders, the suspension of margin and short trading by major exchanges, per the directive of the People’s Bank of China (PBOC), does little to help matters.
Equally unsettling is the uncertainty that comes with such flat behavior, a concern for long term investors as well. Predictions for mid/long term trends and recommendations for prudent entry/exit points are reduced to little more than uninformed guesswork.
With little news of significance to fundamentally guide the bitcoin price, you’re left with only the technicals. Traders observing the flat activity are inclined to remain on the sidelines, which in turn results in more flat activity until some imbalance breaks the cycle.
Often, the uncharacteristically flat behavior is the preamble to some major market movement. This was indeed true the last time we examined the issue. It should not be misconstrued as any form of market settling on the fundamental value of Bitcoin.
Nobody knows for certain which way BTC is going, but that hasn’t stopped traders from offering their 2 satoshi. Some have had enough:
“i can’t look at this anymore … nothing makes sense … see you @btc single digits! later…”
“it will drop to crypto hell based on simple math…1 piece of bad news will send us under 400”
One also ought to keep in mind that on this date one year ago, BTC traded near $150 for some time before soaring to new highs, which have only been partially given back over the past 6 months. If Bitcoin is destined for astronomical returns, it is certainly entitled to bouts of corrective and mundane behavior on its way up. Optimists agree:
“sell your house, borrow more from the bank…ask your parrents to borrow…and go all in…”
“the sideway move is exactly what a healthy currency does. It was the massive swings up and down which were unhealthy.”