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Blue Line Futures president Bill Baruch says that Bitcoinâs decreased volatility is a signal that âselling has become exhausted.â
Bitcoinâs volatility is now at its lowest level in more than a year, signalling a likely bottom, futures broker Bill Baruch said in an analysis for CNBC Monday, June 18.
The Blue Line Futures president noted that after the leading cryptocurrency lost as much as 70 percent in value since its peak in December 2017, Bitcoinâs (BTC) decreased volatility is a signal that âselling has become exhaustedâ:
âA bottom is a process not a price. Now that [Bitcoinâs] price and volatility are back down to earth, this bottoming process can begin.â
Baruch attributed Bitcoinâs soaring value in December to the launch of Bitcoin futures contracts on CME and CBOE, with âtremendous speculation and the fear of missing outâ causing prices in the cryptocurrency sector to âsky-rocket too quickly.â
The subsequent sell-out has now âwiped out most, if not all, of the over-enthusiasm,â he suggested, saying that in the near-term, a bottom would occur âmore quickly and more constructivelyâ if Bitcoinâs recent low of $6,000 holds. Baruch qualified his analysis, however, by noting that Bitcoinâs 100 week moving average is now down to $4,550.
The broker considered that Bitcoinâs 6-month downtrend will remain intact until a close above $11,300, with a near-term downtrend holding if the currency closes above $8,500.
In the long-term, Baruch maintained âsignificant upside,â and singled out $10,000 as is a âcrucial line in the sand,â going so far as to advise selling against it.
This month has seen a series of controversial discussions surrounding the impact of Bitcoin futures markets on the leading cryptocurrencyâs fortunes, with Fundstratâs Tom Lee attributing Bitcoinâs âsignificant volatilityâ to the timing of CBOE futures contract expirations.
A much-discussed research paper released June 13 by academics at the University of Texas alleged that US dollar-backed cryptocurrency Tether (USDT) was being used as a shorting mechanism by institutional actors âto provide price support and manipulate...prices,â artificially deflating the price of Bitcoin to maximize short-term returns on futures contracts.
Yet further reports have this month revealed  that the U.S. Commodity Futures Trading Commission (CFTC) has been probing major U.S. crypto exchanges as part of its own investigation into whether price manipulation might be compromising Bitcoin futures markets.
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