the next price change will be before Christmas
It has been a month since the FTX issue rocked the cryptocurrency market, the main black swan that spread all its wings to create a black hole in the trust of the ecosystem. Calm has returned after 30 days, but beware, Bitcoin (BTC) historical volatility is near long-term lows.
Institutional participation remains stable during the platform audit phase
D+30! It has now been 30 days and 20 trading sessions since the last bear shock in the cryptocurrency market. and during this time prices have stabilized amazingly. The downside shock occurred over 2 sessions before giving way to a new topic of major concern, the financial audit of major cryptocurrency players.
Therefore, investors are still giving the ecosystem a chance to demonstrate its ability to adapt to the auditing standards of traditional finance.. Cryptocurrencies have been considered their own asset class since 2018/2020, but have never been considered on par with other markets (stocks, bonds, loans, forex) due to lack of regulation/transparency.
The cryptocurrency market has entered a major new phase of its young existence and is starting with proof of reserves.is the first step before an in-depth audit review by world leaders in the sector in the coming months.
Binance looks good in terms of reserve volume and diversification, however this forces all platforms to play the game of this new demand for transparency demanded by institutional investors.
Moreover, the latter are patient for a month, there is a stabilization or even a (very) slight increase in their exposure. To track total institutional participation in the cryptocurrency market, I recommend the asset under management (AUM) barometer of the world’s largest Bitcoin ETF, issuer Proshares, and its popular BITO. (this is the mnemonic code of the product).
AUM reached about $1.5 billion and is currently stable at around $570 million. The end of the bear market will first be indicated by a bullish reversal in institutional participation, which at this stage they expect to see.
Figure 1: Chart exposing AUM of Proshares BITO ETF
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Note that Bitcoin’s historical volatility measurement is reaching extreme measurement support
A technical certainty occurred to me this week: The next delay in the cryptocurrency market will be before Christmas.
This shift will be several thousand dollars and either there will be a final clean at $10,000 or a strong breach of chartist resistance will be a signal to end the bear market..
I draw this conclusion from a chartist analysis applied to the 7-day historical volatility curve of Bitcoin’s price (see chart below). Bitcoin’s volatility actually broke support late last October, signaling the continuation of a downward volatility trend that completely collapsed after the bearish shock of early November.
With past events such as a fall from $6,000 to $3,000 in 2018, a rise from $4,000 to $10,000 in 2019, or a rise to $10,000, a level that will create strong volatility is now in sight. $70,000 in 2020.
Bitcoin price will therefore make its technical choice over the next two weeks and the move will be very impulsive..
Figure 2: 7-day historical volatility in weekly Bitcoin price data
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Sources: Figure 1: Ycharts.com Figure 2: TradingView
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Vincent Ganne is a market strategist, technical analyst, stock trainer and speaker for BFM Business. With extensive experience in analysis, he offers a global approach to financial markets. Both from a macroeconomic point of view and from a microeconomic point of view. Vincent Ganne also uses many aspects of chart analysis to predict trends in financial assets over the medium to long term.
Vincent Gane
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