Bitcoin volatility 3-year lows

Bitcoin circles $9,200 as realized volatility sees three-year lows

Decreasing volatility and a narrow trading corridor makes Bitcoin ripe for a breakout, according to one analyst

Bitcoin traded in a tight corridor on July 15 as stocks reacted to fresh coronavirus news

Data from CoinMarketCap showed a quiet 24 hours for BTC/USD, which began the week showing classic stock market correlation.

On Tuesday, U.S. and European equities markets reacted warmly to hopes that a new coronavirus vaccine may be an effective preventative treatment.

Dow Jones and S&P 500 futures were up 1.8% and 1.3% respectively on Wall Street, following similar rises for the FTSE 100 and others. 

The optimism likewise appeared to stop Bitcoin from erasing more of its gains from the weekend, with BTC/USD bouncing off $9,200 twice in the past 24 hours. But, BTC did crack slightly below $9,200 minutes before press time.

Bitcoin volatility 3-year lows
Bitcoin’s 7-day price performance continues to narrow its corridor. (Photo: CoinMarketCap)

BTC bull case targets $9,440 close

As Modern Consensus reported, stocks correlation remains a focal point of Bitcoin price action, and analysts do not consider it likely that the trend will break down soon.

For popular social media trader Josh Rager, however, the status quo nonetheless appeared ripe for disruption, given Bitcoin’s increasingly narrow trading corridor.

“Nice wick down on lower time frames to liquidate longs,” he commented during Tuesday trading. 

“Would like to see price reclaim daily open $9,233 to start then break/close above $9441 for daily higher-high[.] But still compressing with lower-highs and higher-lows on trend[.] Build up for a big move just days away.”

Bitcoin volatility 3-year lows
Josh Rager’s short-term Bitcoin price prediction outlook. (Photo: Josh Rager/Twitter)

In the event, Bitcoin opened right on target, but momentum propelling the market higher towards $9,500 remained absent at press time. 

Ready for a move

On-chain analytics suite Skew noted that 30-day realized volatility for Bitcoin was now at its lowest since 2017, before BTC/USD hit all-time highs of $20,000.

Last week, a similar trend appeared, this time with 10-day realized volatility, which returned to its position from November 2018 — weeks before Bitcoin crashed to $3,100. 

Bitcoin volatility 3-year lows
Realized volatility is at its lowest since 2017 (Photo: Skew)

Low realized volatility, then, would seem to point to an incoming break-up of sideways price performance.

A comparison of Bitcoin volatility within the realm of macro assets meanwhile delivers interesting conclusions. In 2020, Bitcoin’s downward trend has seen it become a more stable bet than emerging currencies, and is on target to match US real estate, according to a standardized chart from statistics resource Woobull.

Oil firmly stands as the most volatile macro asset of those included in the chart, given its multiple difficulties due to coronavirus and associated lack of demand.

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Anthony Bevan is a journalist focusing on disruptive finance and cryptocurrency, along with the changing face of the market as Bitcoin gains mainstream adoption. Journalists covering cryptocurrency for Modern Consensus May hold positions in some of the currencies they write about.