Bitcoin's Low Volume Breakout Could Be a Bull Trap

Bitcoin looks primed for a move to $8,000, but low trading volumes point to the risk of a bull trap.

At the same time, daily trading volume fell 1.77 percent to $4.85 billion, according to CoinMarketCap.

Further, rolling 24-hour trading volume currently stands at $4.95 billion - down 22.5 percent from the current quarterly average of $6.38 billion.

Low volume is a cause for concern for the bulls, as it is widely considered a sign that the market is approaching a peak; that is, the rally will be short-lived.

At time of writing, the cryptocurrency is trading at $7,591 on Bitfinex - down 2 percent from the previous day's close of $7,718.

The bullish outside-day candle followed by a bullish crossover between the 5-day and 10-day moving averages, and an upside break of the falling trendline, indicate scope for a rally to $8,000.

The decline in trading volume over the last seven days puts a question market on the sustainability of the corrective rally from $7,040 to $7,779.

On the 4-hour chart, trading volume has picked up as prices fell back to $7,549 from the high of $7,764.

The anemic trading volume during the price rally and the later increase in trading volume during negative price action indicates a high probability of a downside break of the rising wedge pattern.

In such a case, bitcoin risks falling back to last week's low of $7,040.