The price volatility of Bitcoin (BTC) and Ether (ETH) reached a new multi-year low in August, as the top two cryptocurrencies continue to trade below their key resistance levels of $30,000 and $2,000, respectively. According to data from crypto analytic firm Kaiko, the 90-day volatility of BTC and ETH dropped to 35% and 37%, respectively, which is lower than the 41% volatility of oil. This decline in price momentum for the top two digital assets has not been seen since 2016.
The chart provided by Kaiko indicates that the price volatility of BTC and ETH is now less than half of what it was at the same time last year. Despite August traditionally being a bullish month for the crypto market, the decreasing price fluctuation is viewed by many as a positive sign.
In addition to the 90-day volatility reaching its lowest point in seven years, the daily volatility of Bitcoin is also at a five-year low. This observation led a Bitcoin technical analyst known as “CryptoCon” to share insights on the implications of this decline in price volatility and what typically follows such periods.
The analyst pointed out that Bitcoin went through a similar cycle of low price volatility in 2020 before the start of the bull market. However, they cautioned against the possibility of Bitcoin moving sideways without any significant upward or downward movement. The analyst believes that every major period of low volatility for Bitcoin is eventually followed by a big price move.
To support this viewpoint, the analyst referred to historical price data, highlighting a previous instance in which Bitcoin’s price dropped by over 50% in a day, falling below $5,000 due to a Black Swan event in 2020. Yet, Bitcoin managed to recover the following month. However, when the price approached $10,000, the momentum dissipated, leading to a period of low volatility. After three months, Bitcoin broke out and achieved new highs, only for the price to encounter resistance and enter a sideways movement.
Based on this historical pattern, the analyst concluded that Bitcoin tends to break out of lows after a period of low volatility and forms a first high, followed by a second high, with a third high being made against the key resistance level. Therefore, the analyst anticipates a significant price movement is on the horizon for Bitcoin.
In summary, the decrease in price volatility for Bitcoin and Ether is seen as a bullish sign by many, with the current levels of volatility at their lowest point in years. The low volatility period historically precedes a significant price move for Bitcoin, which is anticipated by the analyst based on past patterns.
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