A quant has explained how recent trends in US stock market volumes are related to the Bitcoin price.
The TradFi low frequency oscillator has bottomed and is now picking up again
As one analyst explained in a CryptoQuant post, depth of volume in traditional financial markets has been shallow lately.
“TradFi volume” is a measure of the total number of transactions made by buyers and sellers in the US stock market.
There is a concept called “market depth” which represents the ability of any market to accept large orders without greatly affecting the price of the commodity.
In general, the more orders there are in a market, or simply the higher its volume, the greater the depth of the asset. However, it is important that these orders are distributed evenly in the market, otherwise the depth would not be so great.
An oscillator can be used to identify the cyclical trend at the depth of an asset. Here is a chart showing how the US Stock Market Volume Oscillator has changed values over the past few months:
The value of the metric seems to have flipped in the past few days | Source: CryptoQuant
As you can see in the chart above, the quant has marked the relevant trend zones between the bitcoin price and the TradFi volume depth oscillator.
It looks like the value of the crypto has been observing bearish winds whenever the indicator has swung from positive to negative values.
On the other hand, the metric crossing the zero line in the opposite direction has resulted in an uptrend for the price of BTC.
Bitcoin has also seen local bottom formations around the points where the deep oscillator of stock market volume has made bottoms of its own.
About a week ago, the indicator reached very low levels, comparable to those between February and March 2020. Since then, the key figure has been rising again.
The analyst believes this recent trend formation could indicate that Bitcoin could soon find some respite and rally to levels between $21.5K and $24.5K.
bitcoin price
At the time of writing, the price of Bitcoin is hovering around $19.2k, up 2% over the past seven days. Over the past month, the crypto has lost 4% in value.
The chart below shows the evolution of the coin’s price over the last five days.
It looks like the value of the crypto has been stuck in consolidation for the past few days | Source: BTCUSD on TradingView Featured image by Traxer on Unsplash.com, charts by TradingView.com, CryptoQuant.com
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