Decreasing volume rings an alarm bell

As Bitcoin’s price action continues to grow erratic, we keep staying on the sidelines and monitoring the situation. Today, we would like to highlight one development that occurred yesterday when Bitcoin nearly hit $36,000. We are talking about the significant drop in the number of Bitcoin addresses with balances exceeding 100 BTC (remember, there was a massive jump in this number just shortly before the release of fake news about ETF approval, which took Bitcoin above $30,000). This event suggests that some of the big players are utilizing the opportunity to cash out their profits (in fact, the number has been trending down since around 23rd October 2023). Furthermore, while it does not mean Bitcoin has already topped, this development, combined with decreasing volume, rings an alarm bell for us as it indicates fewer people are willing to buy the asset at the current prices, making a case for trend reversal. With that said, we will pay close attention to RSI on the daily chart. To support a thesis about the trend reversal, we would like to see it break below 70 points. Simultaneously, we want to see a decline in MACD and Stochastic. Contrarily, to support a continuation of the rally, we would like to see an uptick in volume, accompanying the price higher. We will update our thoughts on the asset with the emergence of new developments.

Illustration 1.01

Illustration 1.01 displays the daily chart of BTCUSD. Green and red arrows indicate a questionable relationship between the price and volume, which suggests fewer buyers are willing to buy the asset at such elevated price tags.

Illustration 1.02

Illustration 1.02 shows the 1-minute chart of BTCUSD, illustrating the erratic start of the month for Bitcoin.

Technical analysis gauge
Daily time frame = Bullish
Weekly time frame = Bullish
*The gauge does not necessarily indicate where the market will head. Instead, it reflects the constellation of RSI, MACD, Stochastic, DM+-, ADX, and moving averages.

Please feel free to express your ideas and thoughts in the comment section.

DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.

Comment:

There is one more interesting thing to point out. On 4th October 2023, we noted that despite our skepticism about higher price tags, there would be one bullish scenario to consider - a flight of capital amid a weakening banking sector combined with outflows from commercial bank deposits.

Illustration 1.03

The picture above shows the daily graphs of four regional banks in the United States.

Illustration 1.04

Illustration 1.04 shows the level of commercial bank deposits, which started to decline at the end of September 2023.

Comment:

Over $700 million was moved from unknown wallets to crypto exchanges in the past three or four days.