Indicator Suggests Bitcoin (BTC) is Like a Coiled Spring Ready to Burst with Price Volatility Above $100K
Volatility traders seeking to profit from significant price fluctuations may soon have opportunities. A crucial indicator suggests that bitcoin (BTC), currently priced above $100,000, is like a coiled spring ready to unleash energy in either direction.
The indicator in question is the rolling 60-day price range, which shows the percentage variation between the highest and lowest price ticks. A narrower range indicates stable market conditions characterized by range trading and a balance between supply and demand.
According to Glassnode’s analysis, bitcoin’s 60-day range is now narrower than the current trading range. Historically, such situations have foreshadowed periods of increased volatility.
“All of these instances have occurred before a significant increase in volatility, with most happening during early bull markets or prior to late-stage capitulations in bear cycles,” Glassnode stated in its weekly analysis report.
BTC’s price chart with its 60-day high-low range. (Glassnode)
Volatility tends to revert to the mean, fluctuating around its historical average. Sharp price movements usually follow periods of low volatility and vice versa.
It is also indifferent to price. Higher volatility means larger and potentially more unpredictable price swings, without indicating whether prices will rise or fall.
Recent activity has shown a bullish bias, especially on the Chicago Mercantile Exchange, where traders have been accumulating call options. Similar bullish sentiment can be seen on Deribit and other platforms.
“BTC futures are trending upwards, particularly on the near end, as the market’s net-long exposure from last week remains strong. Bullish positions currently outnumber bearish ones by a ratio of approximately 20:1,” QCP Capital mentioned in a Telegram update.
If market positioning is any indication, it appears that participants are expecting a bullish outcome for bitcoin following its multi-week consolidation between $90,000 and $110,000.
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