The bitcoin bulls were back in force on Friday, as markets finally broke out of a prolonged stalemate that had kept price action fairly subdued. The rally, which occurred suddenly, threatened the underlying assertion that bitcoin still has room to fall before reaching a definitive bottom.
BTC/USD Price Update
The cryptocurrency market rose to nearly one-month highs on Friday in a rally that picked up speed around midday. Bitcoin printed a high of $3,800 on Bitfinex, having gained more than 8% during the session. Earlier in the week, bitcoin had traded at its lowest level in nearly two months.
Bitcoin was last seen trading just below $3,700 on Bitfinex, where it was little changed compared with 24 hours ago. Trade volumes amounted to $6.7 billion, down from a Friday peak of around $8.1 billion.
The Bullish Case
Bitcoin is still a long way away from its glory days, but the recent breakout suggests that the worst of the downtrend may be over.
The leading digital currency has witnessed a sharp drop in volatility in recent weeks. As Hacked recently reported, the 30-day volatility index has fallen to its lowest level in two-and-a-half months. This basically means that the magnitude of changes in the bitcoin price have narrowed significantly.
The sharp drop in volatility has been confirmed by SFOX, an institutional broker-dealer that analyzes a bevy of exchange data on bitcoin and other cryptocurrencies. Based on its January Volatility Report, SFOX said the top-four cryptocurrencies by market cap saw a major decline in volatility last month. As a result, the broker’s multi-factor market index improved to ‘mildly bullish’ from ‘mildly bearish’ previously. The shift in sentiment was noted in January prior to the recent recovery.