Bitcoin (BTC) Realized Volatility Hits Rare Levels: What’s Next for the Leading Cryptocurrency?

• Bitcoin’s Realized Volatility has recently dropped to historically low levels.
• Such low volatility levels have only been observed ten times in the past six years.
• Historically, periods of low volatility have often preceded sharp price movements.

Bitcoin’s Realized Volatility has plummeted to historically low levels, suggesting potential for significant price movement in the near future.

Bitcoin Realized Volatility Has Declined To Extreme Lows Recently

In a recent post on X, CryptoQuant author Axel Adler Jr discussed the latest trend in Bitcoin’s Realized Volatility. This metric measures how volatile an asset has been based on its price returns over a specified period.

High values of this metric indicate significant price fluctuations, while low values suggest that the asset’s price action has been relatively stable.

Here is a chart showing the trend in Bitcoin’s 1-week Realized Volatility over the past few years:

As shown in the chart, Bitcoin’s 1-week Realized Volatility has recently dropped to around 7%, a level seen only ten times in the past six years. This indicates that Bitcoin’s recent price consolidation is among the tightest in its history. Historical patterns suggest that such periods of low volatility often lead to sharp price movements.

For instance, the last time Bitcoin experienced such low volatility, it was followed by a rally to a new all-time high (ATH). However, it’s important to note that these sharp movements can go either way, meaning the price could either surge or crash.

It remains to be seen how Bitcoin’s price will evolve from here, given the historically low volatility observed over the past week.

Impact of Mt. Gox Movements on On-Chain Indicators

In another post, Axel Adler Jr highlighted that recent movements from the bankrupt exchange Mt. Gox have caused many on-chain indicators to show false signals. One such indicator is the Bitcoin Adjusted Spent Output Profit Ratio (aSOPR).

The aSOPR tracks the net profit or loss realized by investors across the network. The recent movement of Mt. Gox’s Bitcoin, which had been dormant in wallets for a long time, has resulted in a significant spike in this metric, indicating a large amount of realized profit.

However, this spike is not a true sign of profit-taking and should not be considered a market-impacting signal.

BTC Price

Bitcoin’s price has declined over the past day, currently trading at $66,800.

Conclusion

Bitcoin’s Realized Volatility has dropped to historically low levels, suggesting potential for significant price movement. Historical patterns indicate that such periods of low volatility often precede sharp price changes, although the direction of the move remains uncertain. Additionally, recent movements from Mt. Gox have caused false signals in on-chain indicators, which should be interpreted cautiously. As Bitcoin’s price continues to evolve, investors should stay informed and prepared for potential volatility.