Bitcoin (BTC) Above $100K Is Like a Coiled Spring Approaching Explosive Price Change, Key Indicator Suggests
Volatility traders looking to capitalize on significant price changes may soon find opportunities. A key indicator suggests that bitcoin (BTC), which is currently above $100,000, resembles a coiled spring ready to release energy in either direction.
The indicator is the rolling 60-day price range, which represents the variation in maximum and minimum price ticks in percentage terms. A tighter range indicates stable market conditions characterized by range play and demand-supply equilibrium.
Glassnode’s analysis shows that bitcoin’s 60-day range is now tighter than the current trading range. Historically, such patterns have presaged volatility explosions.
“All of these instances occurred before a significant burst of volatility, most of which were in early bull markets or before the final surrender phase of bear cycles,” Glass nodes said in its weekly analysis report.
Volatility is mean-reverting, that is, it tends to oscillate around its lifetime average. Rapid price changes often follow periods of low volatility and vice versa.
It is also price agnostic. Higher volatility means that price changes will be larger and potentially more unpredictable. It does not say whether prices will rise or fall.
Recent flows, however, have been biased, particularly on the Chicago Mercantile Exchange, where traders is piling up in call options. A similar bullish bias is evident on Deribit and other exchanges.
“BTC futures continue to rise, especially on the front end, as the market’s net-long exposure remains solid from last week. Bullish bets currently outnumber bearish ones by a ratio of about 20:1,” said QCP Capital in a Telegram broadcast.
If positioning is a guide, it’s safe to say that market participants are expecting a bullish resolution to BTC’s multiweek consolidation between $90,000 and $110,000.
