Silent signals in the cryptocurrency market: turning points detected by oscillators

On the surface, the cryptocurrency market appears quiet due to decreased trading volume, but deep within, subtle yet meaningful changes are underway. According to recent analysis by 10x Research, signals captured by technical oscillators are revealing the true state of the current market. Despite a 30% drop in cryptocurrency trading volume over the past few weeks compared to normal levels, funding rates in the derivatives market have continued to rise slightly, and leverage ratios remain high. Amid these contradictory signals, technical indicators including oscillators are hinting at the market direction for the new year.

What Oscillators and Technical Indicators Are Telling Us

In cryptocurrency market analysis, oscillators are crucial tools for detecting trend reversals. Currently, Bitcoin’s Relative Strength Index(RSI) stands at 43%, with the Stochastic Oscillator at around 30%. These indicate short-term bearish signals, but paradoxically, they also suggest proximity to a bottom zone.

Ethereum shows a similar pattern. Its RSI is at 44%, and the Stochastic Oscillator is at 23%. Both assets are entering oversold territory on the oscillators, signaling potential for a technical rebound.

Signals of a Rebound in Bitcoin in January

Bitcoin’s current price is $89.31K, down 2.07% over the past 24 hours. Technically, about 4.5% upside is needed to confirm a trend reversal. The current key short-term resistance is at $88,421, with a major upside resistance at $98,759.

Notably, Bitcoin’s realized volatility has significantly contracted. The 30-day realized volatility has fallen to 38.2%, below the 30-day average of 45%, a 7 percentage point decrease. Typically, after volatility contracts, a major directional move tends to follow. The options market is entering a correction phase, hinting at structural changes in the market, where even small price movements could lead to large position adjustments.

Ethereum Is Sending Similar Signals

Ethereum’s current price is $2.96K, down 4.43% over the past 24 hours. About 5% upside is needed for a trend reversal. The key short-term resistance is at $2,991, with a major upside resistance at $3,363.

Ethereum’s 30-day realized volatility is at 61.2%, which is 5 percentage points below the 66.6% 30-day average. Like Bitcoin, it is entering a phase of volatility contraction, signaling potential for significant price movements. Despite the inflow of ETF funds, activity in stablecoin trading, and the decoupling of futures positions from previous correlations, oscillator indicators continue to send consistent signals.

Hidden Changes Amidst Sharp Volume Decline

The sharp decline in trading volume(compared to normal levels) is one reason the market appears calm. However, behind the scenes, orderly liquidation of futures contracts continues, and funding rates are gradually rising, albeit modestly. This suggests that some investors are unwinding positions, while structural changes in the market are ongoing.

As technical indicators approach critical turning points, the asset rebalancing happening beneath the surface may become visible. Oscillators and other technical tools are detecting these early signs, making cautious observation in the January market essential.

What Will the Market in January Look Like?

The technical signals for Bitcoin and Ethereum collectively suggest a potential upward reversal in January. The contraction of volatility, oversold signals from oscillators, and the narrow gap to technical resistance levels are creating favorable conditions for a rebound.

However, considering the current low trading volume and complex market structure, the magnitude and sustainability of any rebound will depend heavily on the influx of new capital. Monitoring whether oscillator signals align with actual market movements will be a key challenge for investors.