Bitcoin volatility drops to two-year low

According to experts at Messari, the price of the first cryptocurrency may fall sharply in the case of growth of this indicator

20.10.2022 - 12:45

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2 min

What’s new? Analytics firm Messari reported that bitcoin volatility has dropped to a two-year low, the index stands at 18,83. Experts studied the 30-day volatility index (BVOL) of the asset, developed by the BitMEX crypto exchange, and also noted that the first cryptocurrency is currently trading in a narrow price range. According to historical data, the value of BTC could fall sharply in the case of BVOL growth.

1/ Despite the greater macro volatility #Bitcoin's volatility is at its lowest levels in over two years.Could Bitcoin finally be decoupling from the greater market? 🧵 pic.twitter.com/GgsrXkaQia— Messari (@MessariCrypto) October 19, 2022

What else has Messari added? The current price action is anomalous but not unique, experts note, BVOL has reached these levels in the past. That said, the last three BVOL closes below 25 have resulted in significant movements in the bitcoin price, but two of the three have seen gains. Messari suggests that, based on historical data, the first cryptocurrency will soon move out of its current price range.

On October 10, analysts at Bloomberg also pointed out that the volatility of BTC had dropped to a 2-year low, noting that the asset has been trading in the $20 000 range for the past four months. Some experts, interviewed by the publication, indicated the narrowing of the Bollinger bandwidth indicator, they tend to consider it as a sign of the imminent intensifying fluctuations of BTC and a possible drop in its price. Analysts at Glassnode are of the same opinion, also pointing to a prolonged consolidation of the asset’s price.

Experts at Arcane Research noted that the correlation of open interest in futures and perpetual contracts on bitcoin to its capitalization reached a new high. They also concluded that this may indicate a sharp increase in volatility in the near future.

As of October 20, 12:20 UTC, BTC is trading at $19 236, having added 0,31% per day, according to Binance. The asset has a capitalization of $368,59 billion.

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