Bitcoin (BTC) price is less volatile than gold (GLD) and stocks, suggesting violent price moves ahead: K33 Research

Bitcoin (BTC) price may be soporific lately, but it has become so dull that a dramatic breakout could soon occur.

According to digital asset analytics firm K33 Research, Bitcoin’s five-day volatility has fallen below that of gold, the Nasdaq 100 and the S&P 500. This has only happened a few times in recent years, emphasized Vetle Lunde, senior analyst at K33, each time preceded by periods of sharp price swings.

Except for a brief Ripple-related spike to $31,800 in mid-July, Bitcoin has traded in an increasingly tight range for the past six weeks, with its price mostly remaining between $29,000 and $30,000, only rarely over the past few days Stepping out of the $29,000-$29,500 range. At press time, the price was changing hands at $29,100.

While cryptocurrencies are popularly known for their dramatic price fluctuations, more stable periods are a normal part of every market cycle. However, according to the K33 report, this recent phase of lack of volatility is anything but typical.

BTC’s 30-day volatility, which measures average price changes over time, recently dropped to nearly a five-year low. At the same time, trading volumes also fell to multi-year lows, while derivatives activity also fell sharply.

“A deep crypto sleep is usually followed by a violent awakening,” wrote Vetle Lunde. “The market is clearly in an unprecedented steady state, which typically acts as a massive pressure valve for volatility once it finally flares up again.”

“My short-term thesis,” he continued, “is that market volatility pressures are about to peak and a breakout is imminent.”

Upcoming decisions on spot BTC ETFs and a court ruling in the lawsuit between GBTC fund issuer Grayscale and the US Securities and Exchange Commission (SEC) could be potential catalysts in the next two months, Lunde said. Grayscale is a subsidiary of Digital Currency Group, CoinDesk’s parent company.

However, he added that structural forces in the derivatives market could also create volatility on their own without the news events happening, as was the case in June 2020 or January this year. During this upward pressure, Lunde said most traders were preparing for further price declines by building up short positions. As prices moved in the opposite direction, traders had to cover their positions, adding to the appreciation.

“A gradual but aggressive BTC accumulation is currently my preferred strategy,” advised Lunde, adding that the trend allows for some contrarian strategies, such as the future.”

Learn Crypto Trading, Yield Farms, Income strategies and more at CrytoAnswers
https://nov.link/cryptoanswers