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Home Cryptocurrency news

Bitcoin Monthly Volume Signals Consolidation Not Bullish Reversal, Data Shows

Tony Spilotro by Tony Spilotro
1 year ago
in Cryptocurrency news, Bitcoin
Reading Time: 3min read
bitcoin monthly trading volume
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Bitcoin price closed its February monthly candle below $9,400, after a massive surge in January that took the price of the first-ever cryptocurrency from $6,800 to nearly $10,000.

The massive move in January appeared to be the start of a new bull market trend, but the devastating crash on the heels of coronavirus pandemic proliferation panic has increased fears that another bear market may be starting across the asset class. However, according to volume data, both months are more than likely nothing but consolidation ahead of the real reversal.

February Monthly Candle Closes Bearish, Clamors Crypto Traders

Following a 60% rise in the first two months of the year, crypto investors had been fully confident that a new bull market had begun, and the rally was just the start of the surge ahead of the upcoming Bitcoin halving this May.

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Related Reading | Bitcoin To Explode By 80% Before Halving According to Past Cycle Comparison 

But during the last week of February, just as coronavirus fears reached crisis mode and caused the worst stock market crash since the economic recession occurred, Bitcoin and other cryptocurrencies also had a cataclysmic collapse.

Bitcoin, which had been trading at highs of over $10,000 – a key psychological level – fell in dramatic fashion, reaching $8,400 at its recent low before making an attempt to bounce higher.

The fall turned a bullish February price candlestick into an extremely bearish one. The monthly close being so “bad” was the talk of the cryptocurrency community over the weekend, comparing it to the “top” candle back in July of 2019.

The two candles look strikingly similar, however, volume tells a very different story.

$BTC #Bitcoin – Have heard much talk about how bad the monthly candle was. Always look at the volume on each candle because it determines the strength of the signal

Compare this months volume to similar candle from July 19th

This is a consolidation candle, not reversal candle pic.twitter.com/JRxSiDz8m0

— Cheds (@BigCheds) February 29, 2020

Bitcoin Volume Points To Consolidation, Not Yet Ready For Reversal

Volume is often more important than price action itself, as, without volume to support a movement, any price action is likely highly manipulated and unsustainable.

A surge in volume accompanying a surge in price is typically indicative of a full-scale trend reversal. It’s also the major difference between the July 2019 monthly candle and the current February 2020 close.

In July 2019, the candle closed alongside a massive boost in trading volume, suggesting an extreme amount of Bitcoin changed hands during this timeframe.

The high volume reversal sent Bitcoin back into a bear trend for the last eight months, which it is still struggling to break free from.

Related Reading | Bitcoin Bearish Sell Pressure Is Waning Despite Aggressive Selloff 

But until Bitcoin paints a high timeframe bullish candle that arrives with a massive spike in trading volume, Bitcoin is likely to remain in a bear trend.

It’s worth noting that bearish trading volume has been waning over the last two years, so that full reversal into a bull market may not be too far off at this point.

Tags: bitcoincryptomonthlyvolume
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a digital media executive and global remote work leader with a decade of content experience and excellent. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter and feel free to drop me a line if you would like to work together.

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