Bitcoin Price Surges But the Volume Declines – Disaster Imminent?

For the second time in just 8 days, the Bitcoin price failed to break the $12,000 level. Regardless of the widespread FOMO inside the crypto investing community, the magical barrier remains strong. Nevertheless, in 2020, BTC already recorded a 71% increase in value, giving its believers great returns.

Still, only a quick glance on the charts reveals a serious case of a declining volume. Not only that, but a quick technical analysis shows other signs of major weakness. The BTC/USD 4-hour Coinbase chart below clearly exhibits the declining volume, RSI, and MACD. These three are the most important indicators in the whole trading business. Not just cryptocurrencies trading, but for all other tradable assets as well.

Bitcoin price dispairity
Source: Coinalyze.net

There can not be growth without volume. But why is Bitcoin still growing?

Enthusiasm, FOMO, or Market Manipulation Pushing the Price of Bitcoin?

During the first half of the year, Bitcoin underwent another miners’ reward halving. Since this is among the most important events in Bitcoin’s existence and it happens approximately every 4 years, investors were hyped up about the latest one as well.

With expectation so high, it’s no wonder that HODLers decided not to sell their favorite asset. On the other hand, opportunistic traders probably decided to ride the wave as far as it can take them. Consequentially, the price started to rise. Yet, and we already warned our readers about that, new money failed to enter the market. The blatant example of that is the market’s overall market capitalization of $360 billion. Just for the sake of the comparison, VISA dwarfs this market cap by a good $50 billion.

This means that the cryptocurrency market is still, believe it or not, in the infancy phase. Such a low volume to be able to push the price up by 40% is single and by far the most reliable proof for that statement. Yes, the young market opens the opportunity for big gains, but, naturally, for huge losses as well.

Therefore, now, we have BTC desperately trying to break $12,000 with all kinds of “influencers” predicting more surges in the immediate future. Sadly, it’s highly improbable that this will come to pass. No matter how powerful the FOMO effect is, it will eventually wear out, leaving enthusiasts who tried to catch the wave with bags full of currently overpaid BTC. Naturally, some of them will be complaining about the market manipulation completely unaware that they disregarded all the technical red flags.

Speaking about market manipulation, it is also a possibility when we have such a blatant disparity between the price and its technical indicators. Simply put, it is entirely possible that whales are trying to squeeze the price towards the desired level just to dump Bitcoin on unaware investors that were late to attend the real party.

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What Does Bitcoin Have as an Advantage?

This is a question that needs two answers.

Firstly, if we compare Bitcoin to the traditional financial system, it has all the imaginable advantages except very poor transaction speed. Of course, only if the market isn’t highly bullish. In those times, BTC transaction fees are becoming so high that it becomes virtually unusable for what it was designed to do.

On the other hand, compared to its crypto competitors, the list of advantages grows thinner by the day. It’s not the fastest or the most efficient. It doesn’t have the smart contract capability, nor can it scale. In fact, there are only two things that separate Bitcoin from the rest of the pack. It has the first-mover advantage and by far the most miners.

The first becomes a neglectable advantage with every new stage of development by some of the fresh projects. Well, in the end, who uses AltaVista as a search engine nowadays, huh? Miners supporting Bitcoin is fantastic security-wise. However, Proof-of-Work is slowly becoming redundant as even the second biggest cryptocurrency, Ethereum, is switching to Proof-of-Stake. Since the mining equipment is expensive, we can expect miners to be there for BTC to whichever end. Probably because nothing else of value will be there for them to mine anyway.

Therefore, Bitcoin can be regarded as a fossil fuel vehicle in 2050. It was good back in the day but nowadays, it is just a thing for collectors. In the future, we’ll all drive Rimac, Tesla, or some other to-be brand. Bitcoin, therefore, is an entry-level crypto investment only because it is the only cryptocurrency that briefly touched the mainstream back in 2017/2018.

The DeFi Hype Revealing Bitcoin Weaknesses

The DeFi hype is exposing all the weaknesses of Bitcoin as an asset. The new DeFi projects do not only have much greater growth potential than Bitcoin but are also technologically much more advanced than their predecessor. It is hard to imagine a newbie investing in Synthetix Network Token (SNX) because his knowledge of the subject is still very limited. Newbie is most probably going to invest in Bitcoin because it’s still the biggest brand in the crypto market. And this is the exact phenomenon that’s been able to drive the price of BTC to this point.

The Bitcoin price is still going to grow in 2021. However, this rally is looking weak and it is bound for a reversal. Sooner rather than later. Will it happen this week? We don’t have to know that to see that the crypto market has changed dramatically during the last 2 years. Therefore, it is most probable that Bitcoin is going to lose investor’s support. First mover advantage can keep you afloat just that much. Ask yourselves, how many first movers since computers entered every home are still on top…


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