Bitcoin analysts say BTC’s low volatility is the ‘calm before the storm’. According to new analysis, Bitcoin price exhibits the trend ahead of the 2021 bull run.
Crypto analysts expect sharp moves from Bitcoin price for these reasons.
Multiple analysts are focusing on the consequences of Bitcoin trading in a tight range for a long time. In its latest report, titled “Quiet Before the Storm,” Glassnode analysts said:
Recent weeks have seen unusually low volatility in Bitcoin prices, in stark contrast to the equity, credit and forex markets, where central bank interest rates, inflation and a strong US dollar continue to wreak havoc.
Research organization Delphi Digital sees the BBWP metric as proof that it is “preparing a big move for BTC.” According to Delphi Digital:
Historically, BBWP readings above 90 or below 5 have indicated significant volatility points.
BBWP has yet to drop below 5, but researchers noted the following for Bitcoin:
Since the second quarter of 2017, BBWP readings above 90 or below 5 have previously averaged a 204% increase or a -51% decrease.
“Bitcoin could still drop to $16,000”
The Twitter analyst, nicknamed Altcoin Sherpa, says that based on the historical data above, Bitcoin has entered a bottoming process after circulating in a similar price range for more than 100 days. The analyst says price activity is different from 2018, when BTC hovered around $6,000 and rallied some around $3,000 before seeing a drop. Instead, he states, it’s like a bottoming process that leads to a bull run in the summer of 2021.
Sherpa said he couldn’t tell how long the bottoming process would take in the $19,000 range. He also said he wouldn’t be surprised if the price drops another 25%.
It’s too early to say that BTC has broken its correlation with the equity markets
However, historical data shows that long-term sideways movements have distinct stages of accumulation and distribution. Glassnode’s Accumulation Trend Score, a metric that “reflects the bulk balance change density of active investors over the past 30 days,” is currently in neutral territory, indicating an equilibrium state in Bitcoin’s accumulation structure.
The report details how, from 2018 to 2019, wallets holding 1,000 BTC to 10,000 BTC tended to distribute their tokens as the bull market accelerated, while individual investors (less than 1 BTC) increased their Bitcoin allocations.
Similar investor behavior can be observed in 2022 as wallets holding more than 10,000 BTC surge to $24,500 before switching from the next low to accumulation mode. As the chart below shows, BTC traders with larger balances (greater than 10,000 BTC) are now neutral while 1,000 to 10,000 BTC is accumulating. Meanwhile, individual investors show varying degrees of balance and selling.
Where is the volatility?
Bitcoin price has been trading in the $18,500-24,500 range for the past 120 days. A series of important economic events will take place in the next two weeks. Here are the critical dates for October:
- October 13: US Consumer Price Index (CPI) report
- October 17: Q3 earnings season begins
- October 28: Personal Consumption Expenditures (PCE) price index
As Kriptokoin.com, we have conveyed the expectations of the analysts from the market after the FOMC minutes and the CPI report in this article.
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