Bitcoin has recently been trading inside a historically narrow 60-day price range. Here’s what normally follows such periods of compressed volatility.
Bitcoin Price Motion And Supply Are Each Constrained In A Tight Range
In a latest post on X, the on-chain analytics firm Glassnode has discussed how BTC hasn’t witnessed much sharp price motion recently. Below is the chart shared by the analytics firm that shows the historical instances where the 60-day price range was narrower than the present one (when it comes to percentage swing).
Looks like there have not been many instances of a tighter price range in history | Source: Glassnode on X
From the graph, it’s visible that there have only been a couple of periods where the asset has traded between a narrower range during a 60-day period than the last two months. This highlights just how tight the value motion has been for Bitcoin recently.
Interestingly, the instances with a more compressed price range all led to especially volatile periods for the asset. Thus, it’s possible that the most recent stale period may additionally find yourself unwinding with a extremely sharp swing within the cryptocurrency.
The volatility decompression after a narrow range hasn’t at all times been bullish; nevertheless, the famous November 2019 crash, which marked the underside of that cycle’s bear market, occurred after historically stale motion within the coin’s value.
The tight price range isn’t the one indication that Bitcoin might be on account of volatility within the near future, as Glassnode has identified that a major percentage of the BTC supply is concentrated around the present price level.
The info for the Realized Supply Density within the +15% to -15% price range | Source: Glassnode on X
The above chart shows the info for the “Realized Supply Density,” which is an on-chain metric that tells us in regards to the percentage of the asset’s supply that was last purchased inside a given range surrounding the present spot Bitcoin value.
Within the graph, the analytics firm has chosen 15% because the range, meaning that the indicator is displaying the quantity of the provision that was last transferred between +15% and -15% from the most recent price.
The Realized Supply Density for this price range has historically followed a curious pattern: a gradual ascent in its value has corresponded to a “volatility constructing” phase for BTC and a subsequent sharp decline to a “volatility release” one.
Recently, Bitcoin has been contained in the former phase from the attitude of this indicator. Around 20% of the BTC supply is concentrated within the ±15% range without delay, which is a notable value. “This creates the potential for amplified market volatility as investor profitability shifts,” notes Glassnode.
BTC Price
On the time of writing, Bitcoin is floating around $105,700, up greater than 5% during the last seven days.
Looks like the value of the coin has seen an uplift in the course of the past day | Source: BTCUSDT on TradingView
Featured image from iStock.com, Glassnode.com, chart from TradingView.com