Bitcoin has been trading sideways for almost a month now, with the bitcoin price dropping sharply at the end of September from its previous plateau of around $10,000 per bitcoin.
The bitcoin price has been hovering around $8,000 since the hotly-anticipated Bakkt bitcoin trading platform went live with underwhelming volumes.
Now, it seems the bitcoin price, which has dropped by almost 50% from its year-to-date high of $14,000 per bitcoin, might be about to make a major move.
Earlier this week, a closely-watched bitcoin technical indicator showed the bitcoin and cryptocurrency market could be poised for a sudden price swing, though it’s not clear which way it will go.
The difference between bitcoin’s upper and lower band in the so-called Trading Envelope indicator is at its narrowest since mid-September, it was first reported by Bloomberg, a financial newswire.
A similar narrowing of bitcoin’s Trading Envelope last month preceded the late-September plummet, while in June the band narrowed before bitcoin leaped to its year-to-date highs.
Bitcoin’s recovery this year from its heavy sell-off in 2018 is thought to have been driven by Facebook’s plans for a bitcoin rival, dubbed libra.
Facebook’s cryptocurrency project has run into more regulatory scrutiny than the social media giant expected, however, with some of the founding members of the Libra Association, meant to independently government the digital token, suddenly pulling out.
“As it becomes more and more obvious that the libra thing is not going to take off–it’s going to be a long time before it becomes an important part of anything Facebook’s doing–as that becomes more obvious, the volatility will pick up again,” Miller Tabak + Co equity strategist Matt Maley told Bloomberg.
“This issue with what’s going on with libra and Facebook is a definite headwind and it’s not going to go away.”
Meanwhile, institutional investors are increasing their bets the bitcoin price is going to move higher soon, with financial institutions more than doubling the value of the long positions it holds in bitcoin futures contracts this month.
The value of institutional investors’ long positions went from below 500 bitcoin, worth around $4 million, at the beginning of October, to over 1,000 bitcoin by October 16, according to data from bitcoin and crypto analyst Skew Markets this week.
Earlier this month, the world’s largest crypto-focused asset manager, Grayscale, said investors have continued to pour cash into bitcoin funds throughout this year.
Elsewhere, bitcoin trading volume among the top ten biggest bitcoin and crypto exchanges has fallen to under $200 million a day, according to bitcoin and crypto data company Messari, down 20-fold from a peak of $4 billion per day just a few months ago.
“Across all crypto venues, volumes are dismal,” eToro’s senior market analyst Mati Greenspan wrote in a Twitter thread, sparking industry concern.