Bitcoin’s low volatility and narrow trading range signal BTC is about to explode
Bitcoin’s consolidation phase has shrunk when buyers and sellers currently hold the cryptocurrency within a narrow $ 200 range. The lower boundary of this channel is around $ 9,100, and the upper boundary is at $ 9,300.
Currently, King Coin’s consolidation bout has been around for more than three months, and it’s unclear when it might end.
This narrow range causes Bitcoin volatility to reach a historic low when its trading volume begins to bleed.
In the past, this low level of volatility made a major move and changed the trend.
Can the data quickly approaching 0 be a sign that a new uptrend is blooming?
In recent years, cryptocurrency has had periods where its notorious volatility disappeared. When this happens, a major short-term trend change occurs. The long-term uptrend has remained the same.
Market technicians see that the uptrend continues as soon as the price of Bitcoin is able to break through the resistance at $ 10,000 – something it has now failed many times.
That breakout may soon occur, now Bitcoin is once again experiencing a period of low volatility ahead of past trend changes.
Bitcoin’s historical volatility. Source: Tradingview
According to the history of assets, the current sideways price action is resulting in readings approaching zero.
This has only happened less than ten times throughout the decades-long history of cryptocurrency. And every time it has, a big change in trend follows.
Sideways trading may be a positive sign
The narrow range that Bitcoin has been caught in may be a positive sign for boring traders, as history shows that these narrow trading channels almost always deal with an explosive movement.
It is important to note that only a few times over the years, in which Bitcoin has been trading in a narrow range as it is today.
Analyst “Ceteris Paribus” talked about this in a recent tweet, explaining that BTC has not posted a 5% move daily for 24 consecutive days.
In April 2019, it witnessed a 27-day consolidation trend within this tight range, and in November 2018, it witnessed a 29-day streak.
“BTC hasn’t had a 5% daily move for 24 straight days. That’s the longest since a 27-day streak that ended on Apr 1, 2019. 1-month return after that was +31%. The longest streak before that was 29 days, which ended on Nov 13, 2018. 1-month return after that was -48%.”
Bitcoin open interest hit a 3-month high could end this consolidation
After a long period of inactivity, traders started opening positions on Bitcoin again. It just set a high for months.
— Byzantine General (@ByzGeneral) July 17, 2020
This could mean that the cryptocurrency is about to see an increase in transaction volume, which in turn can lead to higher volatility.
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