Commentators quickly pointed out the price anomaly was limited to the May contract; the futures contract for June delivery, after all, was still trading above $20 a barrel – a better reflection of oil’s true price. “Technical factors explain some of the decline,” the New York Times wrote. “Oil watchers don’t consider it the most accurate reflection of price action,” the Wall Street Journal wrote.
TWEET OF THE DAY
BTC: Price: $6,960 (BPI) | 24-Hr High: $6,988 | 24-Hr Low: $6,783
Trend: Bitcoin is flashing green on Wednesday as price volatility falls to fresh 3.5-month lows.
The top cryptocurrency is currently trading near $6,950, representing a 1.4 percent gain on the day. The cryptocurrency is lacking a clear directional bias, however, as prices have spent a better part of the last 2.5-weeks trading in the narrow range of $6,450 to $7,450.
Due to the rangebound activity, the spread between bitcoin’s Bollinger bands – volatility indicators placed two standard deviations above and below the 20-day moving price average – has narrowed to $838, the lowest since January 6. The spread was $895 on Monday.
The tightening of Bollinger bands indicates a drop in volatility and often paves the way for a big move up or down.
The daily chart’s MACD histogram, an indicator used to identify trend strength and trend changes, is about to cross below zero for the first since March 20. The impending bearish crossover on the MACD suggests the price squeeze could end with a sell-off. The immediate support of the lower Bollinger band is located at $6,571.
However, on-chain metrics are telling a different story. For example, the seven-day moving average of the number of bitcoins held on cryptocurrency exchanges continues to fall, indicating a strong holding sentiment ahead of the mining reward halving due in 19 days.
The average fell to 2,398,564 on Tuesday to hit the lowest level since June 13, according to blockchain intelligence firm Glassnode. The metric stood at 2,214,365 a week ago, having topped out at 2,404,786 on Jan. 17.
Investors usually move coins from the exchanges to their personal wallets when prices are expected to rise. Meanwhile, bitcoin balances on exchanges typically rise during bear markets.
It’s worth noting the MACD is based on moving averages, which are lagging indicators, and could trap sellers with a bearish crossover. Hence, accumulation signaled by the declining balance of bitcoin on exchanges takes precedence over the technical indicator.
Put simply, bitcoin could rise in the short term and may breach the recent trading range on the high side. Acceptance above $7,450 would open the doors for a stronger rally to $8,000.