July 16, 2024

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Bitcoin volatility is historically low, will a major outbreak follow?

Bitcoin volatility is historically low, will a major outbreak follow?

After the huge increase at the beginning of this year, which brought Bitcoin (BTC) to… High at all times At $73,800, the price has not moved much in recent months.

This volatility has declined further in recent weeks and recently reached a historically low level.

The European Central Bank cuts interest rates and the Bitcoin price responds almost immediately

The European Central Bank cuts interest rates and the Bitcoin price responds almost immediately

Bitcoin volatility in “bottom 6% of cases”

Shortly before the weekend, volatility increased slightly and Bitcoin fell from $71,000 to $69,000. In the lead-up to this decline, 15-day volatility reached an all-time low.

Volatility between May 24 and June 7 was among the “lowest 6%” in Bitcoin history, said Rafa Zagori, IT director at Swan Bitcoin.

“BTC appears to be stuck in a range. Although I don’t like price predictions, I do think there is value in learning from the past. So let me revisit the discussion below and update the numbers.

How low is volatility now compared to history? The horizontal blue line is the latest rolling 15-day volatility figure of 23%. It certainly seems close to the lower level. “In fact, this is in the bottom 6% of cases in terms of volatility,” Zagoury said.

Bitcoin’s low volatility can lead to violent price breakouts

Between May 24 and June 7, the price rebounded from $67,000 to $72,000, and another attempt to reach an all-time high appeared close.

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However, on June 7, the price of Bitcoin suddenly fell sharply to $69,000. This is partly because the US labor market is performing better than expected, reducing confidence in rapid interest rate cuts by the US central bank. This is not seen as appropriate for risky assets such as cryptocurrencies.

However, Bitcoin has been stuck in this range since March, except for a dip on May 2 that briefly took the price down to $58,000.

Long periods of low volatility can often lead to violent breakouts. Al-Zaguri also mentions this.

He stated that after a period of very low volatility, Bitcoin will rise by an average of 21% over the next 30 days. Over 90 days, this averages 57%, and over a year the average is 820%.

However, Zagori says, while we can learn from history, this is certainly no guarantee for the future.


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