Bitcoin Set for Volatility Surge as Market Range Tightens

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Coiled Spring: Bitcoin’s Tight Price Range Suggests Imminent Volatility
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Bitcoin Poised for Volatility Surge, Traders Eye Potential Price Swings

Traders looking to profit from Bitcoin’s price swings may soon have an opportunity. A key market indicator suggests that Bitcoin (BTC), currently trading above $100,000, is akin to a coiled spring, ready to release energy in either direction.

The indicator in question is the rolling 60-day price range, which measures the percentage variation between Bitcoin’s maximum and minimum price over the past two months. When this range tightens, it indicates a period of market stability, often characterized by balanced supply and demand, or range-bound trading.

Recent analysis by Glassnode shows that Bitcoin’s 60-day range has become narrower than its current trading range. Historically, such patterns have preceded significant volatility eruptions.

“Every time this has happened, it has been followed by a sharp increase in volatility—usually at the beginning of bull markets or right before major sell-offs in bear cycles,” Glassnode stated in its weekly analysis.

Volatility tends to be mean-reverting, meaning it fluctuates around its average level. Low-volatility periods are typically followed by rapid price swings, and vice versa.

However, higher volatility doesn’t predict the direction of Bitcoin’s price movement—it simply means that when volatility increases, price fluctuations will likely become larger and more unpredictable.

Recent market flows have shown a clear bullish sentiment, particularly on the Chicago Mercantile Exchange (CME), where traders have been loading up on call options. A similar bullish trend is also evident on exchanges like Deribit.

“BTC futures are on an upward trend, especially in the near term, as net-long exposure remains strong. Currently, bullish positions are outpacing bearish ones by a ratio of roughly 20:1,” said QCP Capital in a Telegram broadcast.

Based on current market positioning, it appears that traders expect a bullish breakout from Bitcoin’s ongoing consolidation between $90,000 and $110,000.

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