Key Points
- The Bitcoin market is currently experiencing low volatility, as per a report by CryptoQuant analyst AxelAdlerJr.
- The report suggests a decrease in the possibility of short-term price swings in Bitcoin.
Bitcoin’s market volatility has seen a significant decrease, according to a recent report by CryptoQuant analyst AxelAdlerJr.
Report Findings
AxelAdlerJr evaluated two main volatility indicators of Bitcoin and found a downward trend in the past few weeks. This suggests a reduced likelihood of a short-term price swing.
The first metric analyzed was Bitcoin’s Garman-Klass Realized Volatility, which tracks the historical volatility of Bitcoin’s price. It combines the highs, lows, opening, and closing prices of Bitcoin over a specified period.
The report indicates that Bitcoin’s Garman-Klass Realized Volatility has dropped to 20%. When this metric is low, it signifies a decrease in the asset’s price volatility.
Historical data shows that whenever this value has dropped this low in the past six years, Bitcoin’s price has undergone significant changes.
The second metric considered was Bitcoin’s Volatility Index using a 30-day small moving average (SMA). This metric measures the degree of fluctuations in Bitcoin’s price over a specific period.
Similar to Bitcoin’s Garman-Klass Realized Volatility, Bitcoin’s Volatility Index has also declined, further confirming the low volatility in the Bitcoin market.
Additional Analysis
An analysis of Bitcoin’s Bollinger Bands and Average True Range (ATR) also confirmed these findings. The Bollinger Bands showed a narrowing gap, which occurs during a period of reduced price swings.
Bitcoin’s declining ATR, which measures market volatility by calculating the average range between high and low prices over a specified number of periods, further confirmed this trend.
When the ATR falls, it suggests lower market volatility and indicates that the asset’s price is trending within a range. Bitcoin’s ATR has declined by 44% since 19 April, standing at 2138.35 at the time of the report.
According to AxelAdlerJr, this current low volatility in the Bitcoin market is a positive sign, indicating the potential formation of a new bullish trend.
