Bitcoin Volatility Index Suggests Large Price Move Arriving Soon

newsbtcPublished on 2022-10-11Last updated on 2022-10-11

Abstract

Historical data of the Bitcoin volatility index hints that the price of the crypto may observe a big move in the near future. Bitcoin Volatility Index Has Recently Been Below...

Historical data of the Bitcoin volatility index hints that the price of the crypto may observe a big move in the near future.
Bitcoin Volatility Index Has Recently Been Below A Value Of 25
As pointed out by an economist on Twitter, the volatility index has declined into a zone that has historically been followed by an explosive move in BTC.
The “volatility index” in question is the BitMEX .BVOL index, and according to the exchange, the metric’s value “is the rolling 30 day annualized volatility of the daily 11:30 UTC to 12:00 UTC Time Weighted Average Price (TWAP) of Bitcoin / USD.”
Here, the Time Weighted Average Price is calculated using measurements made at 1 minute intervals for a period of half-an-hour.
What this index tells us is how much has the recent BTC price deviated from the average, or more simply, how volatile it has been recently.
High values of the metric suggest the crypto has shown some sharp moves recently, while low ones imply a stale market.
Now, below is a chart that shows how the Bitcoin volatility index’s value has changed during the last few years:

Bitcoin Volatility Index

The value of the metric seems to have been quite low in recent days | Source: Alex Krüger on Twitter
As you can see in the graph, the analyst has marked relevant points of trend between the Bitcoin volatility index and the price of the crypto.
It looks like whenever the indicator has dipped below a value of 25, and then subsequently bottomed below the level, the BTC price has seen some significant moves that have made the metric’s value shoot right up.
There have been three instances of this trend during the last few years, two of which involved the price making a bullish move, while the third one a crash.
From the chart, it’s apparent that the Bitcoin volatility index has once again dropped down into this historical zone as the current BVOL value stands at around 24.59.
If the same trend as during the previous instances follows now as well, then the crypto might be heading towards another big move in the near future.
BTC Price
At the time of writing, Bitcoin’s price floats around $19.4k, up 1% in the last seven days. Over the past month, the crypto has lost 9% in value.
The below chart shows the trend in the price of the coin over the last five days.

Bitcoin Price Chart

Looks like the value of the crypto has mostly been moving sideways during the last few days | Source: BTCUSD on TradingView

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