At this point, it may seem like a cliché, but Bitcoin's volatility is extremely low. This is a by-product of BTC's price history over the past few weeks, which most retailers have found "boring".
However, as volatility continues to decrease, analysts conclude that a big step is imminent. Nothing shows this as well as the Bollinger Bands, a textbook indicator that shows important price levels and the volatility of a market.
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Bitcoin volatility continues to decrease
If you take a step back and look at Bitcoin's price development from a macro perspective, you can rightly say that BTC has flattened out. For the past nine or ten weeks, the leading cryptocurrency has been in a 15% consolidation pattern. Both bulls and bears have failed to sustain a two-way outbreak.
As a result, the width of the Bollinger Bands that spread in times of high volatility has reached extremely low values.
Brave New Coin analyst Josh Olszewicz divided The following table indicates that the "tapes have not been as tight since November 2018". Periods with low volatility per Bollinger band are indicated by the vertical lines.
Chart of BTC's macro price action with the width of the Bollinger Bands indicator. Chart shared by Josh Olszewicz (CarpeNoctum on Twitter). Chart from TradingView.com
The observation of Olszewicz is important because for those who don't remember, Bitcoin crashed 50% in the two weeks after consolidation from September to November.
In a way, the price movement before the November 2018 crash is similar to the price movement now: Bitcoin consolidated in both periods for a single price point for 2-3 months.
The question is: will history rhyme or will bitcoin recover upwards?
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The consolidation could break up and propose a basis
According to Mike McGlone As a leading commodity analyst at Bloomberg, the upward consolidation will dissolve:
"Volatility should continue to decrease as Bitcoin extends its transition from a highly speculative asset to the crypto-equivalent of gold. However, we expect the recent compression to be remedied by higher prices."
#Bitcoin Blahs? Benchmark #Crypto Looked similar before previous wins –
Volatility should continue to decrease as Bitcoin extends its transition from a highly speculative asset to the crypto equivalent of gold. However, we believe that the recent compression can be remedied by higher prices. pic.twitter.com/XbIMv5AYAf
– Mike McGlone (@ mikemcglone11) July 2, 2020
This can be confirmed by bitcoin mining data.
The 7-day moving average of the bitcoin hash rate has just reached a new all-time high of 125 exahashes per second.
An analysis by Charles Edwards, a digital asset manager, has shown that a strong mining ecosystem should correspond to higher prices. The Edwards "Energy Value" model states that "the value of Bitcoin is a function of its energy input in joules". Bitcoin is trading 28% below its EV as the hash rate has increased.
Featured Image from Shutterstock Price tags: xbtusd, btcusd, btcusdt Charts from TradingView.com Last Time This Volatility Gauge Was This Low, BTC Dove 50% in 2 Weeks