Quant Explains How US Stock Market Volumes Influence Bitcoin Price

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One volume explained how there is a correlation between US stock market volume and recent trends in bitcoin price.

TradFi depth oscillator has hit low and is now moving back up

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As explained by an analyst at Cryptoquant PostVolume depth in traditional finance markets has been low lately.

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“TradFi Volume” is a measure of the total amount of transactions carried out by buyers and sellers on the US stock exchange.

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There is a concept called “depth of the market”, which is the ability to take large orders without much affecting the price of any given market commodity.

Generally, the more orders placed in the market, or simply, the higher its volume, the deeper the asset’s depth. However, an important point is that these orders should be spread evenly across the market, otherwise the depth will not be as great.

By using an oscillator, a cyclical trend can be observed in the depth of any asset. Here is a chart that shows how the volume depth oscillator of the US stock market has changed its values ​​over the past few months:

quick image

The value of the metric seems to have been turning around in recent days | Source: CryptoQuant

As you can see in the graph above, volume marked relevant areas of the trend between bitcoin price and the TradeFi Volume Depth Oscillator.

It seems that whenever the indicator has converted from positive to negative values, bearish winds have been observed in the value of the crypto.

On the other hand, the metric crossing the zero line in the opposite way has given rise to a bullish trend for BTC price.

Bitcoin has also seen local bottom formations around points where the stock market’s volume depth oscillator itself has reduced.

About a week ago, the indicator hit very low values, which were comparable between February and March 2020. Since then, the metric has started to go back up.

The analyst is of the view that this recent trend formation could mean that Bitcoin could soon take a rest and rally towards the $21.5k to $24.5k level.

bitcoin price

At the time of writing, bitcoin price is floating around $19.2k, up 2% over the past seven days. In the past month, the value of crypto has lost 4%.

The chart below shows the coin’s price trend over the past five days.

bitcoin price chart

Looks like the value of the crypto has been stuck in consolidation during the past few days | Source: BTCUSD on TradingView
Featured image from Traxer on Unsplash.com, charts from TradingView.com, CryptoQuant.com

Credit : www.newsbtc.com

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