Bitcoin’s price rebounded to a multi-month high of $ 43,930 on August 7th. The timing was interesting, especially since Bitcoin closed in the red for three consecutive days before August 4th. In fact, many viewed this move as a definitive breakout of the trading range that the royal coin has been stuck in since May.
After trading sideways in the early hours of the morning on August 6, the bulls of the market took action pushing BTC to the aforementioned high. $ 43,930 is also the highest price of BTC since May 19, 2021.
And yet, despite all the price increases, trading volumes did not soar as they should have. This is an odd finding, especially since the Relative Strength Index reversed on the one-day chart for crypto. At the time of going to press, the RSI for Bitcoin was in the overbought territory, recording a value of 72.8.
Throughout last week, analysts expected a rally as indicators such as the crossover between two moving averages, which last appeared before the 2020 bull run, flashed bullish signals again. However, despite the price spike, market activity did not share the same excitement. Here’s why –
More money, less activity
On the 30-day moving averages chart, the MSOL for BTC saw a massive decline. At the time of writing, MSOL’s extremely low reading was in line with its March 11th level. This was an indication of more daily traffic, consisting mostly of young coins, often associated with dealers and short-term holders.
On the contrary, the ASOL hit a two-month high on August 4th (the last time it was so high was on June 5th). This seemed to suggest that that day a greater proportion of network traffic was being spent with older coins. It may also mean that long-term owners benefited from the high market volatility that day. Nevertheless, the ASOL also recorded an immediate downward trend over the next few days.
Will the price rally continue?
These MSOL and ASOL values indicated more daily traffic. However, active addresses for Bitcoin did not see any recent spikes, which, on the contrary, meant that daily activity was low.
Now this could mean that investors have played it safe with the rise in Bitcoin price. You can wait and see whether the price actually stabilizes or moves further up the charts.
The second argument might be more reasonable here, especially after looking at the implied volatility vs. realized volatility graphs of Bitcoin.
Notably, BTC’s difference in IV vs. RV was its lowest in a month – no surprise given its price high. However, when these price levels were last observed, the implied volatility was significantly higher than the realized volatility.
This is not the case this time. This, in turn, could mean that this is not Bitcoin’s true rally and more ATH may arrive at a later date. Keeping an eye on the IV vs. RV charts and their possible overlap could change the game for BTC yet again.