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Bitcoin Analysts And Traders Say Bitcoin’s Low Volatility Is ‘The Calm Before The Storm’

The stock market has fallen towards its year-to-date lows, while Bitcoin’s price remains range bound. Here’s why crypto analysts are anticipating a sharp move from BTC soon.

If you’ve been hanging around crypto traders this week, you’ve seen three phrases being repeatedly tweeted: “volatility,” “bond prices,” and the potential for “jerky moves” in Bitcoin (BTC) prices. will hear

Multiple analysts have focused on Bitcoin’s range-bound price action, with some questioning whether this is a sign of a market bottom or even a decoupling from the stock market.

In a recent “The Week On-chain” newsletter, a Glassnode analyst said:

“Bitcoin price volatility has been unusually low in recent weeks, in contrast to stock, credit and foreign exchange markets where central bank rate hikes, inflation and a strong US dollar continue to wreak havoc.”

Research outlet Delphi Digital also echoed the sentiment, identifying the Bollinger Bandwidth Percentile (BBWP) metric as evidence of potential “big moves in BTC.” According to Delphi Digital, “Historically, BBWP readings above 90 or below 5 indicated a significant change point.”

BTC price and Bollinger Bandwidth percentiles.Source: Delphi Digital

While the BBWP has yet to fall below 5, researchers say of Bitcoin:

“Since Q2 2017, BBWP readings above 90 or below 5 previously led to an average increase of 204% or a decrease of -51%.”

While it is too early to conclude that BTC has broken its correlation with the stock market or hit a market bottom, historical data showed long bouts of sideways price action marked stages of accumulation and distribution. It suggests that

Related: There is no doubt that the Bitcoin price will finally move and the fireworks will continue

The Glassnode Accumulation Trend Score, a metric that “reflects the intensity of change in total balances of active investors over the past 30 days,” is currently in the neutral zone of equilibrium in Bitcoin’s accumulation structure.

BTC cumulative trend score.Source: Glassnode

The report found that in 2018-2019, entities between 1,000 BTC and 10,000 BTC tended to distribute tokens as the pace of the bull market picked up, while retail investors (less than 1 BTC) It explains in detail that the quota has been increased.

BTC cumulative propensity score per cohort.Source: Glassnode

Similar investor behavior will be observed in 2022, with entities above 10,000 BTC being sold into the bear market, rising to $24,500 before switching to accumulation mode at the next low.

As shown in the chart below, larger BTC balance holders (< 10,000) are currently neutral, while the 1,000 to 10,000 BTC cohort is accumulating. Retail investors, on the other hand, show varying degrees of equilibrium and selling.

BTC cumulative propensity score per cohort.Source: Glassnode

where is the volatility?

Bitcoin’s price has been trading between $18,500 and $24,500 over the past 120 days, and as Cointelegraph noted on Oct. 11, multiple factors may have contributed to the lack of fireworks. There is a nature.

With many important economic events set to take place over the next two weeks, traders may be fostering a desire to sit on the sidelines.

The following events are scheduled for October.

  • October 12: Federal Open Market Committee (FOMC) Minutes
  • October 12: Consumer Price Index (CPI) Report
  • October 17: Third Quarter Earnings Season Begins
  • Oct 28: Personal Consumption Expenditure (PCE) Price Index

Aside from a slight rally in the Dow and the S&P 500, stock markets continue to trend downwards and Russia-Ukraine tensions are intensifying. In addition, a stronger US dollar may also contribute to investor aversion to risky assets.

By analyzing the distribution of coins between long-term and short-term holders, Glassnode found that sellers are likely exhausted, with more than 31% of coins held by long-term holders suffering losses. concluded. Compared with the previous market situation, the researchers noted:

“The market has been in this phase for 1.5 months and the previous cycle length was 6 to 10 months.”

When volatility spikes, it’s impossible to predict which direction Bitcoin’s price will go, but studying on-chain data to decipher the behavior of market participants under nearly identical market conditions is possible. , could help investors decide what to do when the price starts to move.

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. All investment and trading movements involve risk. You should do your own research when making a decision.

Bitcoin Analysts And Traders Say Bitcoin’s Low Volatility Is ‘The Calm Before The Storm’

Source link Bitcoin Analysts And Traders Say Bitcoin’s Low Volatility Is ‘The Calm Before The Storm’

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