- The price of Bitcoin has risen above $70,000 after a prolonged period of stagnant activity.
- This previous lull may indicate future bullish trends, as past instances have often led to substantial surges.
- “When volatility decreases to such levels, historically, it has triggered some of Bitcoin’s largest upward movements,” an analyst noted.
Discover how Bitcoin’s recent low volatility phase could signal an impending massive rally.
Bitcoin’s Historical Volatility Hits an All-time Low
Volatility in financial terms often conveys instability and unpredictability. Defined by Oxford Languages as a “liability to change rapidly and unpredictably, especially for the worse,” volatility in markets denotes the degree of variation in trading prices over a set period.
Technical analysts frequently use historical volatility comparisons to evaluate price movements over an asset’s lifespan. This allows for insights into potential future behavior based on past performance.
Applying historical volatility metrics to BTCUSD over a two-week period reveals that Bitcoin is emerging from one of its least volatile phases since its inception. This rarity is noteworthy because similar periods of low volatility preceded significant rallies of over 9,000% and 2,000%, respectively, in the past. The latest low might foretell significant market movements for Bitcoin and crypto investors.
Is a New Rally on the Horizon: BTC Aiming for a 200-500% Increase?
Volatility tends to follow a cyclical pattern. High volatility phases with sharp price movements transition into prolonged periods of minimal action. When the quiet ends, it often results in another phase of significant price swings.
Using implied volatility as a predictive measure can help gauge the potential for future price activity, although predicting the exact direction remains challenging. Given that volatility generally carries a negative connotation, there’s always the smallest probability of a downward price shift.
Contrary to such pessimism, the past trends show that Bitcoin’s low volatility periods have mainly led to substantial gains. While BTCUSD is unlikely to replicate previous extraordinary rallies of 9,000% or even 2,000%, potential surges in the range of 200% to 500% are feasible.
A 200% increase from $70,000 could push Bitcoin to around $140,000, whereas a 500% leap might see it reach $350,000. Although higher gains are conceivable, they are less probable due to the law of diminishing returns.
Conclusion
Summarizing, the current phase of low historical volatility in Bitcoin signals a potential for a significant bullish trend. Investors who have endured the recent sideways market may yet witness the continuation of Bitcoin’s groundbreaking journey. The anticipation of volatility’s return could pave the way for substantial price action, possibly elevating Bitcoin to new highs.
