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Bitcoin has rallied more than 9 percent in the last nine days, but on low volumes – a sign of low investor confidence. As a result, the gains could be short lived. The bearish volume divergence indicates BTC could dive out of a “rising wedge” bearish reversal pattern seen on the 4-hour chart. A wedge breakdown, if confirmed, could see a return to $8,000 or lower. If trading volumes pick up in the next 24 hours, prices may rise above $8,500 over the weekend, validating a bearish channel breakout witnessed earlier this week.

A clear divergence between prices and trading volumes on the charts suggests bitcoin’s (BTC) recent $800 rally could be short-lived.

Prices are currently up more than 9 percent from recent lows near $7,500 on June 6. Notably, BTC revived the short-term bullish outlook with a move above $8,100 on Wednesday. The follow-through has been positive, as well.

Yes, as trading volumes haven’t picked along with the price rise, the breakout lacks substance.

For instance, bitcoin’s 24-hour trading volume across all cryptocurrency exchanges currently stands at $19 billion – down 42 percent from the high of $33 billion seen on May 16, according to CoinMarketCap.

More importantly, daily trading volume has averaged roughly $18 billion throughout the recent recovery from $7,500 to $8,300, which is significantly lower than the sell volume of $24 billion and $29 billion seen on May 30 and June 4.

While the wider market is reported to be rife with inflated volumes, the numbers from major exchanges included in the calculation of Bitwise’s “real” bitcoin trading volume also show the recent price rise is not backed by big volumes.

The top cryptocurrency by market capitalization is currently trading at $8,270 on Bitstamp, having hit a high of $8,335 in the U.S. trading hours yesterday.

Daily chart (CoinMarketCap)

Bitcoin’s daily trading volume consistently printed above its 50-day moving average throughout the price rise from $4,000 to $9,000.

However, volume has been sitting below the 50-day average since June 6, putting a question mark on the sustainability of the rally from $7,500 to $8,300.

Daily chart (major exchanges)

As can be seen above left, bitcoin trading volumes on Bitstamp have tapered off significantly over the last 10 days, with volume bars consistently printing lower highs.

Volumes continue to remain low despite the bearish channel breakout witnessed earlier this week – a sign of low investor confidence in the price rise. Further, volume numbers on Coinbase and Bitfinex (above right) paint a similar picture.

That bearish divergence of trading volumes indicates the cryptocurrency may dive out of the rising wedge pattern (above left), confirming an end of the bounce from lows near $7,500.

A wedge breakdown, if confirmed, could yield a sell-off to $8,000. Acceptance below that psychological support would expose recent lows near $7,500.

If trading volumes improve in the next 24 hours, bitcoin will likely rise well above $8,500, validating Wednesday’s falling channel breakout.

Disclosure: The author holds no cryptocurrency assets at the time of writing.

Bitcoin image via CoinDesk archives; charts by Trading View