Is Bitcoin on the Brink of a Volatility Explosion? Key Indicators Say Yes!
Coindesk•2 months ago•
1040

Is Bitcoin on the Brink of a Volatility Explosion? Key Indicators Say Yes!

Market Sentiment
bitcoin
volatility
markettrends
glassnode
btc
Share this content:

Summary:

  • Bitcoin is currently above $100,000, indicating potential volatility.

  • The rolling 60-day price range suggests a tighter trading range.

  • Historically, tighter ranges precede volatility explosions.

  • Recent trades show a bullish bias, particularly on the Chicago Mercantile Exchange.

  • Bullish bets outweigh bearish ones by a ratio of 20:1.

Bitcoin's Current Status

Volatility traders looking to capitalize on significant price swings may soon find opportunities. A key indicator suggests that bitcoin (BTC), currently above $100,000, resembles a coiled spring poised to release energy in either direction.

Key Indicator Explained

The indicator is the rolling 60-day price range, representing the variation in maximum and minimum price ticks in percentage terms. A tighter range implies stable market conditions characterized by range play and demand-supply equilibrium.

Historical Patterns

Analysis by Glassnode shows that bitcoin's 60-day range is now tighter than the current trading range. Historically, such patterns have presaged volatility explosions. "All of these instances have occurred prior to a significant burst of volatility, with the majority being in early bull markets or prior to late-stage capitulations in bear cycles," Glassnode said in its weekly analysis report.

BTC Price Chart

Mean-Reverting Volatility

Volatility is mean-reverting, meaning it tends to oscillate around its lifetime average. Rapid price swings typically follow a low-volatility period and vice versa.

Recent Market Movements

Recent flows, however, have been biased bullish, particularly on the Chicago Mercantile Exchange, where traders have been piling into call options. A similar bullish bias is apparent on Deribit and other exchanges. "BTC futures continue to trend upward, especially on the front end, as the market's net-long exposure from last week remains solid. Bullish bets currently outpace bearish ones by a ratio of approximately 20:1," QCP Capital stated.

If the positioning is a guide, it's safe to say that market participants expect a bullish resolution to BTC's multiweek consolidation between $90,000 and $110,000.

Comments

0

Join Our Community

Sign up to share your thoughts, engage with others, and become part of our growing community.

No comments yet

Be the first to share your thoughts and start the conversation!

Newsletter

Subscribe our newsletter to receive our daily digested news

Join our newsletter and get the latest updates delivered straight to your inbox.

BitcoinToday.app logo

BitcoinToday.app

Get BitcoinToday.app on your phone!