Volatility indicators indicate that the Bitcoin price may return to $ 10,000 before recovering to a new 2020 high.
A recent report from cryptocurrency research firm Zubr found that despite extreme volatility compared to traditional asset classes, Bitcoin (BTC) maintains the nature of “market equilibrium” most of the time.
The report a few days after Bitcoin passed the $ 12,000 mark and its volatility finally recovered from a multi-year low.
Using data from CoinAPI, the data provider of the cryptocurrency market, Zubr found that bitcoin price fluctuations are generally accompanied by almost identical movements on the other side, creating opportunities on the positive and negative side.
According to Zuber:
“Most of the time, Bitcoin will simulate approximately the precise percentage increase with a percentage decrease the same day.”
This mirror effect usually occurs on the same trading day, but Zubr also found that it could also occur for longer periods of time.
This means that in the short term, Bitcoin’s recent rally to $ 12,000 could see a similar return to the $ 10,000 levels and a host of other factors indicating the possibility of this decline.
What is there for merchants?
Developing a better awareness of market balance and its relationship to Bitcoin’s price can be very insightful when incorporated into the daily trading strategy, especially given that the volatility phenomenon discussed above has been constant since 2017.
Traders can handle the volatility and profits from the sale and short-term yearning for Bitcoin on a daily basis. However, this is just one of the many things traders should think about.
According to Zuber:
“What the data does indeed indicate is that fewer risk opportunities are possible if one wants to rely on historical events and such a change is critical to the nature of Bitcoin trading. For example, in the event that Bitcoin increases by 10% and return to the open price, the history indicates that there is a great possibility (more than 50%) that the price falls between 9 and 12% the same day or the next day “.
Although not conclusive on its own, this data point can be used when creating a strategy for intraday and momentum trading patterns.
Meanwhile, time will only determine whether Bitcoin will maintain the current market balance or continue to rise above the $ 12K mark.