While world economies continue to burn, Bitcoin is today moving sideways. The largest cryptocurrency has seen its volatility candle drop dramatically after days of rapid movement. Investors are however worried that the latest drop in volatility could be the calm before a storm.
Bitcoin has shown reluctance to react to changes this week, which could only mean an overreaction when it finally moves.
Prominent crypto analyst Anondran has pointed out that “Current $BTC 12H lowest volatile candle (3.3% vs 2.4%) since March 11.” March 11 marked the start of Bitcoin’s plummet, losing nearly 40% and slipping below $5K.
Investors are now embracing for such a move in the days to come, with no one entirely sure whether it will be upwards or downwards. Currently, Bitcoin sits just below a crucial test. The $6,800 resistance has shown resilience with bulls eager to break above and get above $7K. There is fear that another failed attempt to break this will see Bitcoin retrace to the $5K support.
Which Way Will Bitcoin Go?
In the hours that volatility dropped, there has been an increase in Bitcoin buying. Data from Glassnode shows that there has been an 11% increase in Bitcoin addresses in the last 24 hours.
Other positive developments include the passing of the $2 trillion stimulus package in the U.S. Households will receive cash handouts of around $1,200 and some analysts believe some of this money will make it to the crypto market. Buying demand will drive prices up especially with supply being slashed during the Bitcoin halving now less than 50 days away.
One key negative development has been the announcement that more than 3.3 million U.S citizens are out of work. This means partial or no income in the foreseeable future. Potential crypto investors will have little to spare away from food, shelter, and medicine, decreasing crypto buying demand.
As more countries go on lockdown and employees lose their jobs, we could see the number of new investors drop and prices stall. Further down the road, it also means holders are likely to sell crypto to add their dollar liquidity and ensure their survival during the lockdown.
There is no certainty where Bitcoin will head over the next couple of weeks or months. But, it is clear that although it is calm, huge moves are coming.