Bitcoin’s price has been tied for 126 days, but analysts say an explosive move is imminent.
bitcoins
BTC

to mark
$19,772

The lack of volatility has been the dominant point of contention among traders for the past two weeks and the current side trading in the $18,000 to $25,000 range has been in place for 126 days. Most traders agree that a significant price move is imminent, but what exactly is this thesis based on?

Let’s look at three data points that predict an increase in Bitcoin volatility.

Muted volatility and seller burnout
According to Glassnode research, the “Bitcoin market is primed for volatility,” with on-chain and off-chain data giving off different signals. The researchers noted that volatility fell to 28% on the week, a level that is usually followed by a strong price movement.

Bitcoin 1-week realized volatility. Source: glassnode
Bitcoin’s aSOPR scan, a metric that “measures an average profit/loss multiple for coins spent on a given day,” shows:

“There is currently a large divergence between price action and the aSOPR metric. As prices trade sideways or decline, the size of the losses locked in decreases, indicating an exhaustion of sellers in the current price range .

Bitcoin adjusted SOPR. Source: Glassnode
In addition to the divergence between the price and the adjusted SOPR, the short-term holders of Bitcoin are approaching their break-even level as the short-term holder’s SOPR is at 1.0.

This is significant because a reading of 1.0 during a bear market has historically functioned as a resistance level and there is a tendency for traders to exit their positions after breakeven.

If the aSPOR were to break above 1.0 and turn the level to support, it could be an early sign of an initial trend change in the market.

Short-term Bitcoin Holder SOPR. Source: Glassnode
Trading indicators are also at pivot points
Multiple technical analysis indicators also show a sign that a strong directional movement is on the way, a point made by independent market analyst Big Smokey.

According to the analyst:

Crypto research firm Delphi Digital recently issued a similar outlook, citing the “compression” in the Guppy Multiple Moving Average as a sign of “near-term momentum and the potential for a rally as this cohort attempts to move moving averages in the longer term disappear”.

On October 10, Delphi Digital researchers referenced the Bollinger Bandwidth Percentile (BBWP) metric and suggested the possibility of “a big move for BTC.” The researchers explained that “Historically, BBWP readings above 90 or below 5 have marked important turning points.”

BTC Price and Bollinger Bandwidth Percentage. Source: Delphi Digital
Related: Bitcoin Mirrors Previous 2020 Breakout, But Analysts Disagree If This Time Is Different

The State of Bitcoin Derivatives
The crypto derivatives markets are also showing different signs. Bitcoin futures open interest hit an all-time high of 633,000 contracts, while trading volume fell to a multi-year low of $24 billion daily. Glassnode notes that these levels were “last seen in December 2020, before the bull cycle broke out from the 2017 $20K ATH cycle.”

Bitcoin futures open interest. Source: glassnode
As expected during a bear cycle, liquidity, or the amount of money moving in and out of the market, has decreased, reinforcing reason to believe that an eventual increase in volatility could lead to strong price movement.

While derivative metrics such as futures open interest, long liquidations, and currency-margined futures open interest break multi-year records, it is important to note that neither provides absolute certainty about market direction. It is difficult to determine whether most market participants are long or short and most analysts suggest that the increase in open interest reflects the hedging strategies at play.

One thing that is certain is that on-chain data, derivative data, and basic technical analysis indicators all point to an impending explosive move in Bitcoin price.

Bitcoin’s current extended period of low volatility is somewhat unusual, but the

Source: CoinTelegraph

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