Market Analysis

Big move brewing for Bitcoin as trading volume drops in December

While Bitcoin (BTC) has seen a parabolic rally since September, the momentum has stagnated, with BTC/USD unable to break through the all-time high region.

This BTC price level below $20,000 has been accompanied by diminishing volatility and volume, making it increasingly difficult to predict the direction of the next move. Let’s take a look at the crucial levels where volatility could be expected on the lower time frames.

Sideways BTC price action, low volatility for now

BTC/USDT 4-hour chart. Source: TradingView

The lower time frame charts show an apparent range-bound construction that has led the volume and volatility to subside.

The established ranges are now $19,400 to $19,600 and $18,400 to $18,600. The $19,400–$19,600 range is the resistance zone, as the price is having a difficult time clearing this hurdle. On the other hand, buyers are stepping in at the $18,400–$18,600 area, which is serving as the lower bound of the current range.

Bulls can argue that there’s a stable structure of higher highs in progress. At the same time, bears can argue that there are constant lower highs being established on the lower time frames.

Such arguments are the reason why traders are ambivalent about where the price is going in the short term. But what can be expected is heavy volatility once either of these levels is broken.

Potential bearish divergence on the daily time frame

BTC/USDT 1-day chart. Source: TradingView

The daily time frame shows a possible bearish divergence, which would be confirmed once Bitcoin’s price drops below $18,500.

Moreover, if such a drop occurs, the 21-day moving average (MA) will be lost as crucial support that has been intact throughout the current uptrend, as the chart shows.