Glassnode points out that Bitcoin consolidates within a tight range while reaching weekly extreme prices within only 24 hours. There may be volatility, either as a breakout or another rejection, as the weekly aSOPR average approaches the breakeven value of 1.0.
Over the last few weeks, the crypto market has remained quiet, with no significant movement to the upside or the downside.
Occasions driven by events like the announcement of September inflation numbers by the US Bureau of Labor Statistics seem to be the main exceptions. After the value of Bitcoin (BTC) went up like a roller coaster, it dropped and skyrocketed within sixty minutes.
The analytics platform Glassnode describes the crypto market as a coiled spring due to a burst in volatility.
The Consolidation of the Price of Bitcoin Continues
According to Glassnode, the Bitcoin market consolidates within a tight range while reaching most weekly extreme prices in just 24 hours.
Bitcoin traded below USD 18,338 due to incoming US inflation data higher than expected. A quick rally to a high of USD 19,855 followed before completing a round trip at the weekly opening price.
The price of BTC is around USD 19,594 and has accumulated a 2% gain over the last 24 hours. Besides, it has attempted to break above the crucial USD 20,000 resistance level.
Glassnode noted that it is strange for the BTC market to reach such a low volatility period. A highly volatile move has usually followed most cases of this kind before.
For example, the 1-Week Realized Volatility chart shows that volatility values have dropped below 28% in a bearish market. That phase has usually preceded significant moves to the upside and the downside.
Other Signs of Incoming Volatility in the Price of BTC
The Adjusted Output Profit Ratio (aSOPR) metric allows a similar compression. That indicator measures the average realized gain/loss multiple for coins spent on a specified day.
A value of around 1 in a bullish market often acts as support since investors often increase their positions around their cost basis. That usually occurs as a buy-the-dip scenario, but the bearish value of stock acts as resistance as investors try to exit at a cost basis.
The weekly average of aSOPR is approaching the breakeven value of 1.0 from below. Therefore, there may be volatility on the horizon, either as a breakout or another rejection.
Off-Chain Volatility in the Price of Bitcoin Also Brews
Glassnode also indicates that the volatility of Bitcoin seems to be brewing in the derivatives markets. That happens because the short-term implied volatility options price already reached an all-time low of 48% this week.
In the past, that situation preceded violent moves that deleveraging in DeFi and derivatives markets often exacerbated.
Investors should research the all-time high, behavior, and possible future price of Bitcoin before buying it. That will help them find the most convenient investment opportunity to reduce the risk of losing money.
By Alexander Salazar
