Key Takeaways:
- The BVOL indicator may be closing under 25 – a historical sign of volatility
- Whether prices go up or down may depend on coming FOMC/CPI announcements
- However, historical indicators should be taken with a grain of salt
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Bitcoin has been seemingly down-only for the past few months. While healthy consolidation is currently at play, one indicator may suggest a sudden breakout in price.
Termed “$BVOL”, it has resulted in two major previous upside moves, and one to the downside in the past.
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Understanding BVOL
The BVOL, or Bitmex 30 day Historical Volatility Index, is a technical analysis indicator of volatility and time-weighted average price.
It uses the 30 day annualized volatility of the daily Time Weighted Average Price (TWAP) of $BTC, aggregating it into an index.
According to economist and founder of Aike Capital Alex Krüger, every time this index closes below 25, $BTC price has made a significant move.
This has previously correlated with a -50%, 240%, and 35% move.
The BVOL indicator is currently trading a hair above 25, and a close under it could mean a sharp bounce up or leg down from the current charts.
What Could Push Bitcoin Prices?
Market speculators are currently looking at major events to bet on directional price movements.
In the near future, this would be the FOMC meetings, or CPI announcements.
The last few major announcements have echoed this, with crypto market movements, volatility, open interest, and liquidations spiking in the relevant periods.
However, with even Michael Saylor seemingly giving up on buying $BTC right now, the struggle seems to be on the demand side.
Despite this, the amount of $BTC in liquid supply has also decreased.
As HODLing remains the dominant trading style for $BTC holders, less supply is readily available for selling on the market.
With low demand and low supply, a sudden catalyst could cause $BTC prices to react violently.
Should We Listen To Historical Indicators?
While historical indicators are good examples of the past – they are just that.
From not going below previous cycle highs to the Bitcoin rainbow, many technical approaches have crumpled in this bear market.
Furthermore, BVOL has only closed below 25 thrice in the history of Bitcoin, a poor sample size. In fact, many indicators with higher hit rates have flashed recently, and only time will tell whether they come true or not.
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[Editor’s Note: This article does not represent financial advice. Please do your own research before investing.]
Featured Image Credit: Chain Debrief
