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Bitcoin, exploding volumes and volatility

While the stock markets are attempting recoveries, the cryptocurrency sector continues to see a clear prevalence of negative signs, with more than 80% in red, reflecting the explosion of volumes and volatility on Bitcoin. 

The stock market: the day after

The day after the most difficult period in the last 12 years, the stock markets are attempting a rebound that sees the world stock markets with positive signs and increases of even more than 1%. These are ephemeral rises following what happened yesterday, the worst Monday in 12 years, and it is too early to feel safe, these are actions of pride due to the coverage of bearish positions. 

coin360 20200310
Source: COIN360.com

The crypto market

Among the first 25 cryptocurrencies, there is only one green sign, that of Maker (MKR), the only positive one that moves close to 1%. 

Yesterday was very eventful in terms of trading volumes, which marked the highest peak in recent months. On Bitcoin alone, more than 785,000 BTC were traded for a counter value that exceeds 6.1 billion dollars. In terms of quantity and volume in dollars, it is the highest peak since the end of October. To make a comparison, the trades that took place yesterday are three times those of Friday and Saturday. 

This shows how bitcoin primarily, as well as the entire industry, is affected by what is happening with the Coronavirus crisis and the tensions surrounding Opec’s decisions about not cutting the oil supply. 

This is the first time that bitcoin is experiencing a global event which is a double crisis that shakes the sentiment and the nerves of the operators. This can be seen on bitcoin and in the entire cryptocurrency sector. 

Many are perplexed because bitcoin is totally dissociating itself from the safe-haven asset par excellence: gold.

Bitcoin, in fact, is in sharp decline while gold is at a record high of the last 8 years at $1,700 per ounce, peaks reached in 2012. 

This is also reflected in the volatility index. In addition to the VIX, linked to the exchange of options on the S&P 500, even the volatility of bitcoin in a few days has exploded more than 4 times and this also affects the daily volatility on a monthly basis. In these hours the volatility of Bitcoin returns to 3.4% as daily data on a monthly basis, a level not recorded since last November.

Even the fear and greed index drops to the lowest levels recorded in mid-December, a crucial period for bitcoin and for the entire industry. In those days, in fact, the period lows were marked, which remained as the lowest lows of the last year. The fear & greed index drops to 16 points, one step from the low of December 18th. 

Yesterday, the closure of the Italian and European markets was strongly requested through the hashtag in italian language: #chiudetetutto (close everything). Despite the difficulties and double-digit fluctuations, bitcoin and all the cryptocurrencies now possess a sort of antivirus since double-digit fluctuations in particular periods of the year are often on the agenda. 

This market cannot close and crypto exchanges remain open 24 hours a day, 7 days a week. This confirms that activity has increased in the last few days with the hashrate at highs, indicating the increase in mining difficulty, with about 50 days remaining until Bitcoin’s third halving, which suggests that activity on BTC is very strong.

The market cap remains at $225 billion with unchanged dominance for the top three. The only one to show a sharp decline and a confirmation of the current crisis is Ripple (XRP) which fluctuates on the lows of recent years at 4% dominance.

BTC 20200310
Bitcoin chart by Tradingview

Bitcoin (BTC) volatility

With the lows recorded yesterday, the slide in the $7,800 area shows a drop that from the highs of mid-February is -27%. This is the first moment of difficulty since the beginning of the year, which shows that the two-month cycle that began between the lows of mid-December and early January is coming to an end. 

It is important for prices from a technical point of view to consolidate the $7800 baseline and not to extend the fall to $7,200, which would cancel the work done since the beginning of the year. 

The return of positivity calls for a rise above $9,000 to $9,100, levels which, from current prices, call for an increase of 15%.

ETH 20200310
Ethereum chart by Tradingview

Ethereum (ETH)

Ethereum, with yesterday’s bearish movement, has seen the falls extend for a few minutes to $195. It then recovered with prices hovering at the psychological threshold of $200

Ethereum goes to test the bullish trendline that supports the upward movement and joins the lows from mid-December through mid-January to yesterday’s levels. It is a very important test in a medium-term perspective.

Ethereum, unlike Bitcoin, is still in a medium-term technical upward phase. A holding of $190 in the next few days would provide a positive signal. 

Otherwise, the next support is in area 185 and then 175 dollars. A return above 225 with an extension above 245-255 dollars would bring back a wave of optimism on Ethereum, which in any case, since the beginning of the year and despite a bearish movement of 30% with yesterday’s lows, maintains a respectable performance with an increase of 50%.


Federico Izzi
Federico Izzi
Financial analyst and independent #trader – S.I.A.T. & Assob.it partner. He operates actively on stock and derivatives markets (futures and options) since 1997. A precursor of cyclic-volumetric analysis he is known for having identified the most important upward and downward movements in the financial markets of recent years. He participates annually as a speaker at the ITForum in Rimini since the 2010 edition and InvestingRoma and Napoli since the first edition of 2015. He is a guest and market expert on the "Trading Room" and "Market Driver" broadcasts of Class CNBC, Borsa Diretta.tv and on the evening news of Traderlink. Since July 2017 he is a permanent guest on LeFonti.TV, the only weekly national space dedicated to cryptocurrencies alongside the most important international experts in the field. He was interviewed as a cryptocurrency expert for Forbes Italia, Panorama, StartupItalia and DonnaModerna. He was recognized as the first Italian technical analyst to have published the first secular cyclic analysis on Bitcoin. Periodically publishes articles on ITForum News, Sole24Ore, MILANOFINANZA, TrendOnLine and Wall Street Italy. Federico Izzi is... "Zio Romolo".