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Bitcoin (BTC), the world’s largest cryptocurrency with a market value of $571.31 billion, is known for its erratic and highly volatile price movements. However, it is currently exhibiting a significantly low level of volatility. Data suggests that this could be the calm before the storm.
The Calm Before the Storm
James Check, a cryptocurrency expert and on-chain analyst known as Checkmatey on social media, recently highlighted the extent of the silence in Bitcoin. He pointed out that the difference between the Upper and Lower Bollinger Bands for Bitcoin is only 2.9%, indicating a remarkably narrow range. Check, a prominent on-chain analyst at Glassnode, emphasized that Bitcoin has entered such a limited range in its Bollinger Bands only twice in the past: in September 2016 and January 2023. This suggests that it could be the calm before the storm.
Check’s graph titled “Bitcoin Bollinger Bands Range” shows that the cryptocurrency broke the narrow range in the Bollinger Bands of September 2016 and January 2023 with an upward attack. This indicates that the current silence could be disrupted by a significant upward movement.
For those unfamiliar, Bollinger Bands are highly popular technical analysis tools used to measure price volatility. The currently narrow range between these bands indicates a period of low volatility. Data from CoinGecko, which shows Bitcoin trading within a narrow range of $29,143 to $29,445 in the past 24 hours, confirms the low volatility period.
Abnormal Volatility in Bitcoin
Bitcoin’s high volatility since its inception makes the recent period of low volatility abnormal. Furthermore, data indicates that Bitcoin has produced the lowest trading volume since November 2020. The decrease in volatility of the largest cryptocurrency has resulted in it exhibiting even lower volatility than the S&P 500, technology stocks, and gold, which is known for its extremely stable value.
Market experts and observers anticipate that the hesitation of major investors to enter the market could be reversed with a potential positive development like the approval of a spot Bitcoin ETF by the U.S. Securities and Exchange Commission (SEC). They expect this to lead to a return of large investors to the market and a disruption of the current low volatility market conditions.
