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CryptoQuant analyst AxelAdlerJr, in a new report, suggested that the Bitcoin (BTC) market is currently witnessing low volatility. AxelAdlerJr evaluated two significant volatility indicators for BTC and noted that they have been on a declining trend over the past few weeks.
Historical Data on Bitcoin
The first data point the analyst addressed was BTC’s Garman-Klass realized volatility. This measurement gauges the historical volatility of BTC prices. It tracks volatility over a period by combining the highest, lowest, opening, and closing prices of a token. According to AxelAdlerJr, BTC’s Garman-Klass realized volatility has dropped to 20%. When this measurement returns low values, it can indicate a decrease in the token’s price volatility.
The historical evaluation of the indicator revealed that when its value dropped to such low levels over the past six years, the BTC price witnessed significant changes. Additionally, the analyst assessed BTC’s Volatility Index using the 30-day simple moving average (SMA). This measurement gauges the degree of price movement in BTC over a specific period. Similar to the Garman-Klass realized volatility, BTC’s volatility index also declined, confirming low volatility in the leading cryptocurrency market.
Analyst’s Comment on BTC
According to the CryptoQuant analyst, the index value has fallen to extremely low levels “seen only four times in the last six years.” Data from BTC’s Bollinger Bands showed that the gap between the upper and lower bands has narrowed. This occurs during a period of reduced price volatility. BTC’s declining average true range (ATR) confirmed this trend.
The specified indicator measures market volatility by calculating the average range between high and low prices over a certain number of periods. When the indicator drops, it signifies low market volatility and indicates that the token’s price is moving within a specific range. As of the time of writing, BTC’s ATR, which stood at 2138.35, has dropped by 44% since April 19. According to AxelAdlerJr, the current low volatility in the BTC market could be a good sign. The analyst concluded his remarks on the subject by stating:
Given that the market’s current structure maintains a bullish trend and a period of low volatility could be followed by strong price movement, it can be concluded that the market is in the process of forming a new bullish trend.
