Bitcoin’s volatility is compressing, indicating that a sharp range expansion is imminent. Bitcoin (BTC) prices continued to slump on June 3, now trading 20% below its all-time high of $73,835. The current price action reflects the “apathy and boredom” dominating the market. However, on-chain metrics hint that Bitcoin is preparing for a “larger move” soon, as noted by a news report.
Bitcoin Investor Profitability
Despite recent declines, Bitcoin investor profitability remains “remarkably robust.” Bitcoin has had an impressive run in 2024, breaching its all-time high on March 5. However, it has corrected, dropping below the $60,000 level thrice over the last ten days, leading to “fear and bearish” sentiments.
The Market Value Realized Value (MVRV) metric allegedly shows a significant proportion of Bitcoin investors remaining in profit. The aggregate investor profitability remains high, with the average coin holding a two-time profit multiple.
Glassnode analysts stated, “This is a level that often delineates the ‘Enthusiastic’ and the ‘Euphoric’ bull market phases.” They explained that Bitcoin’s accumulation between the $60,000 and $70,000 range since March has led to widespread indecision and a market failing to establish a robust trend in either direction.
Enthusiastic Bull Market
The data from the latest crypto update indicates that when the spot price oscillates between the all-time high and the True Market Mean, it suggests an “enthusiastic bull market.” The True Market Mean, valued at $50,000, represents the average cost basis per active investor.
“At the moment, prices remain within the Enthusiastic bull regime after a few very brief excursions into the Euphoric zone,” Glassnode stated. They highlighted that $50,000 is a key pricing level for Bitcoin to stay above if the macro bull market is expected to continue.
A report by 10X Research suggests that if Bitcoin fails to remain above $60,000, it could rapidly descend to lower support levels, potentially reaching as low as $50,000.
“Psychologically, breaking the 60,000 Bitcoin price would be damaging, as prices could drop quickly to the nearest support level, which might be $55,000 or even $50,000,” the report stated.
Advertisement Banner
After several months of range-bound price action, Glassnode analysts noted a decline in Bitcoin’s volatility across multiple time frames. Realized Volatility across 1-week, 2-week, 1-month, 3-month, 6-month, and 1-year timeframes shows a negative 30-day change.
The report indicates that “a signal is triggered, inferring that volatility is compressing, and so are investor expectations of lower volatility ahead.” Volatility compression marks a decline in historical volatility or fluctuation in Bitcoin price performance. It is often followed by significant market movements, either upward or downward.
Glassnode also assessed the percent range between the highest and lowest price ticks over the last 60 days and found that Bitcoin’s market volatility continues to “compress to levels rarely seen.”
When this compression happens after lengthy consolidations, it typically means the price is readying for “large market moves.”
Sell-Side Risk Ratio and Market Equilibrium
Regarding the Sell-Side Risk Ratio, analysts assessed the absolute sum of realized profit and loss relative to the asset size, and the Realised Cap, and found that this metric has contracted to historic lows.
“This suggests that a degree of equilibrium has been established during this price consolidation and alludes to heightened volatility expectations in the near future,” the analysts noted. This means that the current trading range is in the “later stages of developing toward the next range expansion.”
Bitcoin and Crypto Market Implications
Bitcoin price volatility remains a critical factor to watch. As the market anticipates potential large movements, investors should stay informed about updates from reliable sources like The BIT Journal. Keeping an eye on Ether ETFs, BTC ETH, and other crypto updates can provide valuable insights into market trends for Bitcoin and Ethereum (BTC ETH).
This consolidation phase could lead to significant shifts, highlighting the importance of closely monitoring Bitcoin price volatility and market dynamics.
The price predictions and financial analysis presented on this website are for informational purposes only and do not constitute financial, investment, or trading advice. While we strive to provide accurate and up-to-date information, the volatile nature of cryptocurrency markets means that prices can fluctuate significantly and unpredictably.
You should conduct your own research and consult with a qualified financial advisor before making any investment decisions. The Bit Journal does not guarantee the accuracy, completeness, or reliability of any information provided in the price predictions, and we will not be held liable for any losses incurred as a result of relying on this information.
Investing in cryptocurrencies carries risks, including the risk of significant losses. Always invest responsibly and within your means.
