Low volatility in BTC, ETH, and XRP could signal the next move 🚨 This article is 5 years old...
Low volatility in BTC, ETH, and XRP could signal the next move
5 min read
Updated: Dec. 16, 2019 at 3:42 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
The top three cryptocurrencies by market cap, Bitcoin, Ethereun, and XRP, entered a stagnation phase that extended for the past 24 days. The low levels of volatility could be a signal that these cryptocurrencies are due for some price action. The following technical analysis will explore where BTC, ETH, and XRP could be heading next.
Bitcoin (BTC)
Bitcoin is trading within a descending parallel channel since the peak at nearly $14,000 on June 26. Since then, every time the flagship cryptocurrency hits the bottom of the channel, it bounces off to the middle or the top. But, when it hits the top of the channel, it falls back to the middle or the bottom.
At the moment, BTC appears to be heading down after the price rejection from the middle line of the channel. A further increase in the selling pressure behind Bitcoin could take it to test the lower boundary of the pattern once again.
Despite the bearish outlook, the Bollinger bands are squeezing on BTC’s 1-day chart. This indicates that this cryptocurrency entered a consolidation phase. Squeezes are typically followed by periods of high volatility. The longer the squeeze, the higher the probability of a strong breakout.
Thus far, Bitcoin is trading within the lower the upper and lower Bollinger band for the past 24 days. This trading range is a reasonable no-trade zone due to the high risk that it poses to trade within it. The area sits between $6,970 and $7,800.
A break below the $6,970 support level, could imply that BTC is indeed on its way down to test the lower boundary of the descending parallel channel seen on its 1-week chart. But, based on the Fibonacci retracement indicator, such a bearish impulse could cause a steeper correction.
This technical index estimates the next level of support after a close below the 65 percent Fibonacci retracement level, at $6,900, sits around the 78.6 percent Fibonacci retracement level, at $5,470.
Nevertheless, a spike in buy orders that allows BTC to close above the $7,800 resistance level could trigger an increase in demand for the pioneer cryptocurrency. If this happens, Bitcoin will likely surge to test the next levels of resistance given by the 50 and 38.2 percent Fibonacci retracement levels, which are sitting at $8,500 and $9,700, respectively.
Ethereum (ETH)
According to Coin Metrics, a cryptocurrency market and network data provider, Ethereum’s 60-day volatility is falling to levels not experienced since 2016. The lack of price action took this crypto into a no-trade zone. This area is defined by the lower and upper Bollinger band sitting at $140 and $155.5, respectively.
As the Bollinger bands continue to squeeze on the 1-day chart, the probabilities for a drastic price movement increase. Therefore, it would be wiser to wait for a break below support or above resistance before entering a trade.
Based on the Fibonacci retracement indicator, it seems like a break below the 78.6 percent Fibonacci retracement level could be catastrophic. Under this scenario, Ethereum would likely free fall to the next level of support around $100. This would represent a 30 percent correction from current price levels.
Nonetheless, an increase in the buying pressure behind ETH could push its price upwards, allowing it to close above the $155.5 resistance level. An upswing would likely follow, taking this crypto the next level of resistance that sits around the 61.8 percent Fibonacci retracement level.
Regardless of the ambiguity seen on Ethereum, the TD sequential indicator is signaling a potential move up. This technical index is presenting a buy signal in the form of an aggressive thirteen on ETH’s 12-hour chart. And, tomorrow’s candlestick could turn into a red nine on the 1-day chart.
If these bullish signals are validated, ETH could be preparing to surge. However, as long as this crypto does not close below the $140 support or above the $155.5 resistance level, trading it poses high-risk exposure.
XRP
XRP is trading within a parallel channel since Nov. 26, based on its 1-day chart. A retracement follows every touch of the upper boundary of the channel to the lower edge and vice-versa.
Now, this cryptocurrency is trading at the bottom of the channel, which suggests a potential rebound to the top. But, the lack of volume seen in the last week makes it difficult to time the upswing.
Also, the massive amount of XRP that Ripple sold over the last three quarters could still be affecting the upside potential of this cryptocurrency.
As a result, it is wiser to analyze XRP from a long-term perspective, such as the 1-week chart. Under this time frame, this crypto is trading within the $0.20 support and the $0.24 resistance level.
A break below support could take XRP to hit a new lower low. The next price hurdles sit at $0.17 and $0.15. Conversely, closing above the resistance barrier could trigger an inflow of capital that takes this cryptocurrency up to $0.30.
Overall sentiment
Based on the previous technical analysis, it seems like the top three cryptocurrencies by market cap are contained within no-trade zones. The inability to move outside of their respective trading ranges is forcing the Bollinger bands to squeeze on their 1-day chart. This is a clear sign that volatility is underway.
Patience would play a key role in benefitting from the direction that these cryptocurrencies end up taking. Thus, it would be worth paying close attention to the support and resistance levels mentioned above
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In this article
Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
Ethereum
$3,314.87
Ethereum is a decentralized, open-source blockchain platform that enables the creation of smart contracts and decentralized applications (DApps).
XRP
$1.33739
The XRP Ledger is a decentralized cryptographic ledger powered by a network of peer-to-peer servers.
Coin Metrics
Coin Metrics is a leading provider of crypto asset market and network data.