Bitcoin
What Could Happen Next – TradingView News
Data shows that Bitcoin’s realized volatility metric has fallen to historically low levels. What usually happens after this pattern forms?
Bitcoin’s perceived volatility has fallen to extreme lows recently
In a post on X, CryptoQuant author Axel Adler Jr discussed the latest trend occurring in Bitcoin’s realized volatility. Realized Volatility here refers to an indicator that basically tells us about how volatile a certain asset has been based on its price returns within a specified window.
When the value of this metric is high, it means that the asset in question suffered a large number of fluctuations during the period. On the other hand, the low indicator implies that the commodity’s price action was stale.
Now, here is a chart showing the 1-week realized volatility trend for Bitcoin over the past few years:
NewsBTC
As displayed in the chart above, Bitcoin’s 1-week realized volatility has fallen to quite low levels of around 7% recently. This is so extreme that only ten other cases in the last six years have seen the metric drop similarly.
This means that the recent cryptocurrency consolidation has been one of the tightest in its history; As for what this trend in the indicator could mean for the cryptocurrency, perhaps past patterns could provide some insight.
An inspection of the chart reveals that this stale asset price action often unfolded with a burst of strong volatility. The latest occurrence occurred just before the rally towards the new all-time high (ATH).
Given this pattern, it is possible that BTC’s recent consolidation could also lead to another sharp move for the cryptocurrency. Something to note, however, is that the volatility emerging from the Realized Volatility lows has historically gone either way, implying that the price movement emerging from this tight range could very well be a crash.
It remains to be seen how Bitcoin’s price will develop from here on out, given the historically stale action it witnessed last week.
In other news, as Axel pointed out in another X post, the recent move by the failed exchange Mt. Gox has caused many on-chain indicators to show false signals.
The analyst cited the Bitcoin Adjusted Spent Output Profit Ratio (aSOPR) chart as an example.
aSOPR monitors the net profit or loss made by investors across the network. As Mt. Gox BTC has been sitting in wallets for quite some time, it is not surprising that its movement has “realized” a large amount of profit.
Of course, this increase in the indicator is not really a sign of profit taking, so it is not a signal that would impact the market.
BTC Price
Bitcoin fell in the last day as its price dropped to $66,800.