Skip to main content

Bitcoin Monthly Volume Profile Analysis

Bitcoin Monthly Volume Profile Analysis

This is the monthly volume profile gap and some important price points according to monthly volume profile, this is a bit important for you to understand the risk and reward of the current market situation.

So let’s start with the sentiment, which is pretty bullish. (according to twitter sources)

The next thing is Open Interest. Which is almost near all-time high.

Bitcoin Open Interest

BitMEX funding paying shorts. Altcoins are doing pretty good. But at this moment you have to understand the factors which are forcing you to buy bitcoin. And if you are buying then how much risk you are taking. First thing is, as you can see the chart there are some volume gaps on the monthly timeframe. If you have no idea about volume gaps, I am writing an article about it which will take some time but let me explain it to you in short, basically the volume spikes you see on this chart, they are like magnets and the gap area (marked with double-headed arrow) is like an area where BTC can move freely.

So if it is breaking above/below one volume node and entering a volume gap area, it will target the next volume node. For example check the below chart.

Bitcoin volume node

So there are few important price point at this moment for bitcoin which are 9547, 7927, 6389, 4151 as you can see chart below.

Bitcoin chart

There are gaps between 9547-7927. And also 6389-4151. Market maker always try to fill these volume gaps and mostly prefer to fill big gaps (big gaps=big flash moves=big liquidations)

So, these 9547-7927 gap and 6389-4151 gaps are the danger for longs. If the market maker wants, then they can easily push the price into these volume gaps. So I would say if it keeps going up we may see 10k or above according to daily vol profile. But then we may enter 9547-7927 gap in future. Risk-reward is medium if you buy near 7500-7927. And just in case we break 6389 in future, it will target the 4151 vol node and drop will be sharp.

So the Conclusion is

In case bitcoin drops in the near future, you should target 7500-7927 area for a medium risk entry (spot market). And if it drops below 6389 don’t try to catch a falling knife. Because it can go much lower if it breaks that level. Sentiment becoming very bullish and OI too high, funding still supporting shorts and BitMEX Jun futures trading at 400$ premium these are the perfect environment for bears to take control.

So be safe control your greed/FOMO use low risk if you are bullish. Probably this run-up was done by a few groups of whales (remember those spoofs were used to pump the market). Right now there is a small chance of hitting 9800-10k to stop out some shorts before we see any major correction and if we reject from that area targets should be 8500 and 7500.

Shashi (Prachi)

Smile it let your teeth breath Equity Research Analyst at HDFC Mutual Fund ll Portfolio Management ll Wealth Management ll CFA Level 1 Candidate

Leave a Reply