Bitcoin (BTC) has been firmly caught within the throes of immense volatility over the past several days and weeks, with its recent bout of sideways trading ultimately resulting in a massive movement that caused a maximum pain scenario for traders.
This volatility has come concurrently with “extreme fear” amongst investors, which may be a counter-trading signal that means a bullish shift in trend is imminent, and this may be perpetuated by a rise in volatility that is expected by analysts.
Bitcoin Dropped to $7,000 Before Bulls Propelled it to $7,800
At the time of writing, Bitcoin is trading up just under 3% at its current price of $7,520, which marks a notable climb from its daily lows of just over $7,000 that were set in the midst of a major sell-off experienced by the cryptocurrency yesterday.
This sell-off – which had led many analysts and investors to believe further downside was imminent – ultimately resulted in a strong bounce that led the cryptocurrency to post an incredibly strong movement up to highs of $7,800.
From this point, Bitcoin has retraced slightly to its current price levels, and its inability to sustain the bounce has called into question the long-term significance of this rally.
Hsaka, a popular cryptocurrency analyst on Twitter, explained in a recent tweet that he believes that the crypto markets, and Bitcoin in particular, will soon see a large increase volatility.
“$BTC: Stopped on 7800 swing shorts at 7300. Reshorted 7680. Think I’m done with swing trading for a while, seems like volatility is going to start ramping up again,” he explained.
Stopped on 7800 swing shorts at 7300.
Think I'm done with swing trading for a while, seems like volatility is going to start ramping up again. pic.twitter.com/iyxDxLZPSi
— Hsaka (@HsakaTrades) December 4, 2019
Investors Expressing Extreme Fear, Which Could be a Bullish Sign
One factor that should be noted alongside the imminent volatility that is expected by analysts is that investors are currently expressing extreme fear, which has historically been a factor that is counter-traded by investors.
Mr. Anderson, another popular cryptocurrency analyst on Twitter, spoke about this in a recent tweet, telling his followers that this low market sentiment could actually be a bullish sign for Bitcoin.
“$BTC Fear & Greed: The Directional bias is/has been down & this area has clear risk. However, Extreme Fear combined w/ Funding showing a week worth of Shorts willing to pay a premium to short is a setup conducive for disciplined CounterTrend trades. Inexperienced should stay out,” he noted.
$BTC Fear & Greed
The Directional bias is/has been down & this area has clear risk
However, Extreme Fear combined w/ Funding showing a week worth of Shorts willing to pay a premium to short is a setup conducive for disciplined CounterTrend trades
Inexperienced should stay out pic.twitter.com/625b9t6tnI
— Mr. Anderson (@TrueCrypto28) December 4, 2019
If bulls are able to sustain the upwards momentum that was sparked earlier today when BTC surged to $7,800, then the crypto may be poised for further near-term gains.
Featured image from Shutterstock.