Lately, crypto traders have mainly three expressions on their lips. They talk about “volatility”of “bond prices” and of ” jerk “ coming to the bitcoin (BTC) market. Bitcoin analysts and traders agree that a storm is brewing as BTC volatility is abnormally low. Does the calm observed on the bitcoin (BTC) market really herald a sudden movement?
Towards a market trough or a decoupling with the equity markets?
According to analysts and traders, there is bound to be a sign behind the recent price stability of bitcoin (BTC). The price action of BTC could portend a sharp move in the market. Indeed, the current situation could lead to a bottom in the bitcoin market. The price action of the crypto also possibly signals a breakdown in its correlation with equity markets.
Glassnode has recently published a newsletter with statements from its analysts regarding the development of the bitcoin (BTC) market. “Bitcoin prices have seen an unusually low degree of volatility in recent weeks, in stark contrast to equity, credit and currency markets, where central bank rate hikes, inflation and a strong US dollar continue to wreak havoc“, could we read in the letter.
At the same time, research institute Delphi Digital said that a “big moveon the BTC market. He relied on Bollinger Band Width Percentage (BBWP) to make this statement. the BBWP happens to be a derivative of the Bollinger Band indicator. Moreover, it is based on volatility. Delphi Digital explained that historically “BBWP readings above 90 or below 5 marked major tipping points“.
Indeed, since the second quarter of 2017, such readings have led to that is an increase of 204% i.e. a decrease of -51% of crypto. But, you should know that currently the BBWP has not yet dipped below the 5 mark. Moreover, it is too early to say, with certainty, that the BTC will break its correlation with the equity markets.
For the past 120 days, bitcoin (BTC) has been trading between around $18,500 and $24,500. Currently, no one can determine the direction the crypto price will take when volatility peaks. However, it is best to be prepared for a movement in the price of BTC.
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