As the cryptocurrency markets continue to trade sideways as trading volume decreases, many traders are beginning to lose patience and interest in the markets.
Despite this unusual trading activity in generally volatile markets, one analyst believes that it is actually a good sign for the future success of the markets.
At the time of writing, Bitcoin is trading at $6,465, still stuck in its unprecedented trading range between $6,200 and $6,800. In the past month, BTC has only broken out of the range once, when it sharply moved up to nearly $7,000 in mid-October. After making this sharp upwards move, it was quickly thrown back down to approximately $6,600, gradually declining ever since.
Rob Sluymer of Fundstrat Global Advisors, recently wrote about the declining volatility and dwindling trading volume, explaining that although investors shouldn’t get too excited about a pending bull market just yet, there is reason to be hopeful.
“While it is still premature to conclude a major upside trend reversal is broadly under way, each week we have highlighted an incremental ‘Silver Lining’ developing within the crypto universe,” Sluymer noted.
He went on to explain that low volume, decreased volatility, and the bullish divergences that have occurred in the price charts of many large cryptocurrencies, could eventually lead to the next bull market.
“We continue to view the decline in volatility, lower volumes and positive divergences between many alts and larger caps, notably [Ethereum and Bitcoin] as encouraging technical developments,” he said.
Despite being cautiously optimistic, Sluymer has previously expressed, and continuously maintains, that in order for a new bull market to form, it is critical that Bitcoin decisively breaks its September highs of approximately $7,400.
Cryptocurrency Seeing Increased Adoption That Could Aid Prices
Despite there being a generally low market sentiment, the cryptocurrency markets are seeing increased corporate and institutional adoption that is adding to the fundamental strength of the markets.
The latest example of this would be Visa’s CEO announcing that the company is considering adopting cryptocurrency assets.
In a recent interview with CNBC’s Mad Money, Al Kelly, Visa’s CEO, said that the payment processing company is actively considering adopting cryptocurrency as a payment instrument in the future, explaining that:
“I think that [the market needs to actually believe] that crypto is moving from being a commodity to really being a payment instrument. [There also] needs to be a market so that it can become somewhat like a fiat currency in order for us to be comfortable with it.”
While his tone was cautious as best, his latest comments are a big shift from what he has said about the markets in the past, previously saying that the “sun has set” on Bitcoin and cryptocurrency.
During the interview he further added that:
“If we have to go there (cryptocurrency), we will go there, but right now, it’s more of a commodity than a payment vehicle.”
As institutions and corporations become increasingly open to using cryptocurrencies to increase their operational efficiency and to add to their bottom line, investors and the public will likely recognize this, and it could ultimately incubate a future bull run.