Bitcoin continues to move sideways above $60,000 while volatility has fallen to extremely low levels. According to analysts, this situation strengthens expectations that a sharp price movement could occur in the market soon.
Currently, Sean Farrell, Head of Digital Asset Strategy at Fundstrat, stated in his latest assessment that Bitcoin could rise or fall by approximately 30% from current levels within the next two months.
According to CNBC, Sean Farrell noted in a recent client memo that Bitcoin's volatility is approaching record-low levels.
Farrell pointed out that in past periods of similarly low volatility, the price of Bitcoin fluctuated by roughly 30 percent in either direction within the next 60 days.
Bitcoin Price Action Could Be Significant, but Direction Remains Unclear!
Farrell noted that there have been eight separate instances in the past when volatility was this low. He explained that in four of these cases, there was an increase, and in the other four, a decrease.
Therefore, the analyst emphasized that the available data does not allow for a clear determination of the direction of Bitcoin's next move, pointing out that the real criterion may be the scale of this movement.
In other words, the analyst warns that the current period of low Bitcoin volatility could foreshadow a sharp breakout in the coming weeks.
What Caused Bitcoin's Recent Sharp Rally?
Fundstrat analyst Farrell also commented on Bitcoin's recent rally. According to the analyst, the recent recovery of $BTC might have been triggered by the closing of short positions rather than strong spot demand.
The analyst stated that although Bitcoin's price rose after August 14th, the open interest volume for perpetual futures contracts also decreased by about 8 percent. This indicates that the closing of short positions by some investors pushed the price up.
At this point, Farrell recalled that a similar situation occurred in June and early July, noting that the closing of short positions during those periods led to a rise in Bitcoin's price, but was followed by a significant decline.
In conclusion, the analyst emphasizes that periods of low Bitcoin volatility should be closely monitored. Although historical examples show that significant price fluctuations of $BTC can occur after volatility falls to extremely low levels, the analyst notes that the anticipated 30% movement does not necessarily imply a bullish or bearish trend.
*This is not investment advice.
