Frankly, if bitcoin had been around while the slow-witted Gump offered his well-meaning wisdom from a park bench, he could easily have been describing the ever-surprising world of cryptocurrency markets. This time last week analysts across the globe had prepared bitcoin’s obituary. Yet, over the last few days, many of them had ripped it up as they busily typed out the announcement of its rebirth. Fast forward to the wee small of hours of this morning, and those obituaries were being updated once more.
Prior to that, and in what seemed like an unlikely recovery, the flagship cryptocurrency found itself in the lofty realms of $3,600 at one point – a feat almost unimaginable while it was languishing above the trapdoor figure of $3,250.
To many eyes it currently looks to be holding a plucky rear-guard action below the $3,300 line with what appears to be looking very much like a perilous yet albeit sideways movement, holding itself just far enough away from that psychologically important $3,250 to potentially stage a monumental bounce up.
Almost too good a prospect to be true, some might say. And they would be right.
For all the graph looks like it is holding course as it edges carefully from left to right, positioning for a bounce back, there is a serious underlying concern in terms of volume.
Now, here is the bit where we reach for Mr Gump’s chocolates.
The $3,600 figure being prematurely celebrated was, let us say, the truffle – everyone’s favourite.
That dangerous bottom line of support – $3,250 – is the vile coffee-flavoured nonsense that nobody asks for or indeed wants.
The only things waiting in the tray below $3,250 are more coffee-addled delicacies that could lead to serious crypto misery.
That ‘neither here nor there’ figure of $3,400 is the square-looking vanilla thing that we tolerate because someone beat us to the truffle, but at least it is not coffee-centred, so we will settle for it.
However, the problem appears when we take a closer look and bite… there is nothing in it.
This box of chocolates is made up of empty shells. That is the volume.
Since the first day of December, BTC has clearly been on a descending run which, on many occasions in the past, would normally break upwards by this point.
But, and here is the crux, it requires plenty of volume in the market to do that. And that is what is lacking. The volume just is not there.
In fact, it has been slowly oozing out of the market in a similar declining fashion to the value of bitcoin itself.
Without that volume, there is nothing to push a recovery in the right direction.
Its obvious course here is to bounce along that $3,250 low where, if it lingers below it for any length of time, could easily slide into a potential abyss.
And we all know what is lurking there – a tray of unwanted, coffee-centred unpleasantness that even the generous soul of Forrest Gump would struggle to find a kind word for.
Bitcoin is as bitcoin does.
Bitcoin Market Price Chart in RealTime