Bitcoin Set for Potential Volatility Surge as 60-Day Price Range Narrows
Traders anticipating price fluctuations in Bitcoin (BTC) may soon see their opportunity, as a key indicator points to an imminent surge in volatility. With Bitcoin currently hovering above $100,000, the market seems poised for a breakout, with many suggesting that it is like a “coiled spring,” ready to move in either direction.
The 60-day price range indicator, which tracks the percentage difference between Bitcoin’s highest and lowest price points over the past two months, suggests a shift in market conditions. A tightening of this range typically signals a period of relative stability, indicating equilibrium between buying and selling pressures. However, as the range becomes narrower, it often sets the stage for a sharp move in either direction.
According to Glassnode’s analysis, Bitcoin’s 60-day range has recently become tighter than its current trading range, a pattern that historically precedes significant volatility.
“Historically, similar patterns have been followed by sharp price movements, often seen at the start of a bull market or before the end of a bear cycle,” Glassnode explained in its report.
Volatility, by nature, is mean-reverting, which means that after periods of low volatility, there is usually a rapid price swing. While it doesn’t predict the direction, it does suggest that price fluctuations will become larger and more unpredictable.
The current sentiment leans bullish, particularly in the futures market. Traders on the Chicago Mercantile Exchange (CME) have been increasingly purchasing call options for Bitcoin, indicating a growing belief in upward momentum. The same bullish trend is apparent on Deribit and other exchanges.
“BTC futures continue to show strong upward momentum, especially on the short end, with the market’s net-long positions from last week still holding strong. Bullish bets are currently outweighing bearish ones by a 20:1 ratio,” said QCP Capital in a recent update.
Given the positioning of futures traders, it seems that market participants are expecting a bullish resolution to Bitcoin’s ongoing consolidation between $90,000 and $110,000, with the potential for a strong price move in the coming weeks.
