Bitcoin price volatility has crashed over the last 12 months when the bear market has killed speculative frenzy.
The daily volatility, the gap between the high price and the low price, stood at $ 61 yesterday – a decrease of 98 percent compared to the figure of $ 3,468 observed on January 16th 2018 – according to CoinMarketCap data. Meanwhile, the bitcoin price is also down 74% year-on-year. Generally, with a sharp fall in prices, volatility in dollars tends to decrease in parallel.
In particular, volatility was extremely high in percentage terms 12 months ago. The trading range was 26% on January 16, 2018, indicating that the frenzy of the encrypted market was at its peak.
However, volatility eased as the year progressed: from $ 973 in the first quarter to $ 345, $ 245 and $ 195 in the following quarters, respectively. Meanwhile, in percentage terms, the average daily volatility fell from 9.14% to 3.6% compared to 2018.
This year began with a much calmer note. Daily volatility remained largely below $ 200 and hit a 2.5-month low of $ 45.17 on 12 January. Many consider the slippage of volatility a sign of speculative foam that leaves the market and the cryptocurrency close to the bottom.
It is worth noting that a long period of low volatility usually ends up paving the way for a big move. Therefore, BTC may soon violate the six-day trading range from $ 3,500 to $ 3,700.
Furthermore, a break in the interval seems likely as long-term technical charts are biased towards bears. At the time of writing, BTC is changing hands at $ 3,585 on Bitstamp.
As seen above, BTC fell 13% last week, reinforcing the downward-shifting view from the 10-week moving average, currently at $ 3,919.
The outlook remains bearish as long as BTC takes place under the 10-week MA.
4 hour and day chart
BTC has created a neutral diamond pattern on the 4-hour chart. The outlook for BTC breaking the $ 3,700- $ 3,500 downward range would significantly increase if the diamond were breached at the bottom.
The relative strength index (RSI) is basically bearish at 41. So, there is a wide margin for a sell-off sale.
In short, the prospects of BTC breaching the $ 3,700- $ 3,500 downward range would increase significantly if the breakdown of diamonds were confirmed.
- BTC is more likely to see a downward rupture of the $ 3,700- $ 3,500 range.
- $ 4,000 would return to the table if BTC challenged the bearish configuration on the long-term charts with a move above $ 3,700.
Revelation: The author does not hold cryptocurrency assets at the time of writing.
Bitcoin image via Shutterstock; price charts for Trading View