09.06.202218:13 Forex Analysis & Reviews: Bitcoin volatility is rising amid increased trading activity

Over the past two days, Bitcoin quotes have made several sharp impulsive upward and downward jerks. All this happened within the range of $29k–$31k. On the evening of June 7, the asset made a strong bearish spurt and broke through $29k, but on the night of June 8, it began to recover and consolidated above $30k. All this indicates an increase in trading activity, as well as the implementation of an aggressive trading strategy by a small number of large investors.

The main reason for such serious impulse changes in the price is the increase in volatility. Bitcoin's "anxiety" level began to rise as the BTC Market Dominance Index reached 47, a six-month high. This, in turn, indicates an increase in the volume of cryptocurrency purchases, provoked by fundamental factors. In addition, there is an achievement of the absolute maximum number of longs on individual crypto exchanges. The number of open long positions reached 92.2 thousand.

CoinShares also notes the growing demand for investment in Bitcoin funds. At the same time, there is an outflow of funds from funds based on other cryptocurrencies, which indicates a specific market focus on Bitcoin. According to Santiment, there has also been a massive outflow of BTC coin funds from exchanges in the amount of 50,000 coins over the past 7 days. The bullish signals come amid extreme fear in the cryptocurrency market, which may indicate a certain amount of artificiality in the growing interest in Bitcoin. This is also hinted at by the falling interest in BTC futures on CME.

The key signal confirming the high probability of manipulation is the growth of long positions with high leverage. Together with the number of long positions, a large leverage destabilizes the situation and provokes an increase in volatility. The jumps in BTC/USD quotes over the past few days indicate a deliberate increase in the level of volatility and instability in the market. This suggests that some investors are preparing to implement a strategy to knock "weak hands" out of the BTC market. At the same time, Glassnode notes that the majority of BTC investors in 2021–2022 are in losses, which increases the chances of harvesting a large liquidity harvest.

The main technical indicator indicating a likely reversal and the validity of interest in BTC, MACD, is moving flat and does not demonstrate prerequisites for growth. This also indicates the lack of a really high level of interest in the asset. Stochastic and RSI are also moving sideways, which indicates that there is no upward trend in purchasing activity. Ultimately, all these factors point to the deliberate destabilization of the situation around Bitcoin in order to collect liquidity at low prices.