Bitcoin Rallied on Fumes, Not Volume — And Now It's Paying the Price

[Alpen]

Bitcoin opened lower for the fifth session in a row. Analysts have offered plenty of explanations for why the cryptocurrency failed to reach $90K after breaking convincingly above $80K with no major resistance levels visible on the chart.

But one look at that chart raises a different question entirely: how did Bitcoin even manage to rally in the first place?

Spot market trading volume has been falling since February. In the first quarter, daily turnover dropping from $44B to $10B was easy to explain — BTC was stuck in a range. But during the April–May price rally, that figure fell another 22%.

This kind of divergence between volume and price trend has a name in trading literature and VSA theory: market manipulation. Bitcoin isn't the type of asset you'd run a classic pump-and-dump on, but the chart is showing something that rhymes with it.

It's unlikely anyone was deliberately pumping Bitcoin's price. What probably happened is that during the long consolidation phase, a massive chunk of capital rotated into BTC futures. Derivatives volume is now running five times higher than spot.

The danger with derivatives is that market participants can see exactly where stop-losses are clustered. Back in April, most traders were positioned short — which fueled the squeeze-driven rally. Now, speculators and market makers have taken out the bulls' stop-losses, and the market is dropping as those positions get liquidated.

Bitcoin will likely find its footing somewhere in the $73K–$74K range — the former top of the consolidation zone where the upward move originally began. Any attempt to rally again without real volume behind it probably won't get price back above $80K.

[Oshosondy]

Any attempt to rally again without real volume behind it probably won't get price back above $80K.

What do to mean as real volume? This is not something new in crypto. I can remember someone posted about this scenario:

I don't really like the way it started
Most times once the month starts on a pump note
It usually isn't a good month.
But chart wise everything goes well and the correction doesn't eat much of our month gain.
In all I'm quite positive for Q2.

If you want buying in a way that more people will not sell than buying, that can exist more during bull market, especially long period of time bull market.

I have posted that this is not bull run or altseason that some people are thinking. I have seen this pattern before in the paste.

[Hatchy]

If you want buying in a way that more people will not sell than buying, that can exist more during bull market, especially long period of time bull market.
I have posted that this is not bull run or altseason that some people are thinking. I have seen this pattern before in the paste.

Of course, this isn't any bull run..price is not yet ready because when we are in a bull run,it's very much easy to recognise. The only problem now is that price has been behaving a bit awkward. It buys a little then drops down with more pressure from the sell side. In march we could conclude alot that the sellers were still very much active since the volume of sellers were pretty high in the market. In April it changed hands and the buyers seems to have taken a grip of the market. But since we broke the resistance at $80k price has been falling slowly making it more difficult to tell where it's heading next. I agree with op on this, what actually was the reason behind the rally in April? It's all speculations though, who knows...

[Dave1]

If you want buying in a way that more people will not sell than buying, that can exist more during bull market, especially long period of time bull market.
I have posted that this is not bull run or altseason that some people are thinking. I have seen this pattern before in the paste.

Of course, this isn't any bull run..price is not yet ready because when we are in a bull run,it's very much easy to recognise. The only problem now is that price has been behaving a bit awkward. It buys a little then drops down with more pressure from the sell side. In march we could conclude alot that the sellers were still very much active since the volume of sellers were pretty high in the market. In April it changed hands and the buyers seems to have taken a grip of the market. But since we broke the resistance at $80k price has been falling slowly making it more difficult to tell where it's heading next. I agree with op on this, what actually was the reason behind the rally in April? It's all speculations though, who knows...

It's very easy, we are in year 1 of the bear market, so whatever higher highs we see, it's might be just a bull run as we are going to be in the consolidation phase in the next month or so. It's just good that we see the price going as high as $80k, but it's not going to be sustainable in a bear market.

And as you have said, the price has going down since hitting that barrier of $80k'ish. It's because that price is too tempting for speculators not to sell and make profit. So expect that the price will go on a decline and then consolidation phase throughout the year.