- Volatility increased 8% higher in January
- “The market is preparing for a trend-setting, explosive move,” is one of the key takeaway messages from Kraken’s January report
- Bitcoin bulls are looking to push the price action towards $10,500 and $12,300 in the short-term
Bitcoin price is up 3.5% in February, but more importantly, it is trading above the key level at $9,000. The bulls are now creating a base for a move towards $12,000.
Fundamental analysis: Volatility may further pick up
Bitcoin volatility increased in January by 8% to a 3-month high of 58.2%, according to data in Kraken’s “January 2020 Volatility Report”. In the same month, the world’s largest digital coin gained more than 30%.
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“Not only was last month’s +30.3% gain the best start to a new year since 2013, but also the best monthly performance since May 2019; bitcoin returned to Aug. 2019 price levels when price and volatility were in the early innings of a 6-month long downtrend,” it is noted in the report.
Moreover, the data from Kraken shows that there is an increase in open interest, which could mean that “the market is preparing for a trend-setting, explosive move.”
Additional information points toward “whales awakening”, which can further support Bitcoin price. Whales are referred to as addressed with a high accumulation of digital assets, that can create price fluctuations,.
“During the accumulation phase, whales eat into market liquidity,” said Ashish Singhal, co-founder and CEO of CRUXPay and CoinSwitch.co. “That affects the supply-demand ratio and causes volatility to re-enter the market.”
It is believed that the number of whale addresses has increased from 2,000 to 2,030.
“It’s a sign of growing adoption of bitcoin as an investment,” added Gabor Gurbacs, digital asset strategist/director at VanEck/MVIS.
Technical analysis: Bulls eye more gains
Despite this week’s move lower, that erased 2.5% of Bitcoin’s market value, the bulls are still in control. The reason for this is the fact that Bitcoin still trades above the $9,000 mark, which for Bitcoin is a bull/bear line.
Bull/bear line is an extremely important level for an asset with price movements above the line indicating bullish conditions and movements below, signalling a bearish outlook. As long as the bulls are keeping the price action above the $9,000 handle, there is a solid base in place for a push higher.
Another leg higher is likely to result in a test of last week’s high at $10,500. A strong bullish move would likely facilitate a test of the two-year high near the $14,000 mark. In between these two levels, there is another level which may attract interest from both sides – $12,300.
Bitcoin volatility has picked up in January which signals that the whales are on the move. Some analysts believe that this can lead to another Bitcoin rally, as the bulls target $10,500 and $12,300 in the short term, with $14,000 being a possibility as well.