Searching For The Path Of Least Resistance In BTC Price? Look To Realized Volatility For Hints
Anna Carpenter
Wed, 03/31/2021 – 15:00

Authors
FRNT Financial

Publication Date

Image
Crypto Story of the Day

 

CRYPTO MOVERS AND PRICES

 

 

BTC continues to consolidate below USD 60,000 as realized volatility sees an ongoing breakdown. Spot volumes are less than 60% of the 30-day average.

Crypto Story of the Day

With BTC range-bound for the longest period in 2021, we’re receiving growing questions from investors around the direction of the path of least resistance for price. We look to realized volatility metrics for hints.

BTC has undergone the most lengthy consolidation since the rally to new highs, trading almost exclusively between 50,000 and 60,000 since March 3rd. Over the weekend, 14-day realized volatility, which had been tracing an uptrend throughout the rally that began in August, broke down. Anecdotal conversations with clients paints a picture of growing unease around the new calm. 

We would note that over the last 3 years, 14-day realized volatility has touched below 13 a handful of times and every time has led a rally. The 2 most striking instances occurred first between January and March 2019, where BTC made 52-week lows and saw a 3-month, low-volatility consolidation. That period ended a few months before the Facebook Libra announcement, which would see an ongoing rally extend to as high as roughly USD 14,000 before correcting. 

The second instance was during June and July this past summer (2020). After recovering from a highly-correlated snap selloff in March, volatility in BTC deviated from that of the broader macro landscape with 14-day realized volatility actually below that of the SPX at times. 

While the fundamental landscape continued to improve for BTC, investors scratched their heads until early August as little moved in the space. That, of course, came to an abrupt halt and BTC saw its greatest rally to date only 3 months after its lowest volatility period to date. Conversely, sell-offs have more often extended already-high volatility levels in reversing sharp price rallies.

Over the years, the “worst” that a low-volatility period has offered to BTC bulls is a tepid rally about a month after a consolidation. Current realized volatility levels remain closer to the midpoint than the low relative to the last 3 years. 

That said, should this period of quiet extend or volatility continue to break down, a relatively small historical sample size suggests it’s more likely a positive than negative for price.

Please sign up for a free trial of FRNT Financial Morning Note.

Section
Market Analysis

Topic
Crypto

Tags
crypto
cryptocurrencies
Facebook
Financial regulation
Regulation
G7

Site
FuturesMag

Leave your vote

🚀If you want to get a Forex Robot Coded as per your trading strategy but are unable to do so because of the high price for the Robot then you can take advantage of the CROWD FUNDING campaigns feature. ✔ These are some crowd funding campaigns for Forex Robots, which when completed can provide the very same Forex Robot to the participants at an average price of $5-$10 per participant. ✔ You either participate in one of the already listed campaigns or send us your Forex strategy : Submit Crowd Funding Campaign , for which you would like the Forex Robot to be coded. A Crowd Funding Campaign would then be started for the same . ✔ All you have to do later on is to share the campaign online with your friends to encourage more people to participate in the campaign.

As a result, each participant can get that Forex robot for just a campaign contribution of $5 (which is the minimum). Participants can back the campaign by anything above or equal to $5 to reach the funding goal to close the campaign.