Odaily Frontline | Bitcoin volatility hits a three-year low, will it be a harbinger of a bull market?
This article comes fromCointelegraph, Original Author: JOSEPH YOUNG
Odaily Translator |
Odaily Translator |
Bitcoin volatility has dropped to levels not seen since 2017, according to crypto data provider Skew. "Bitcoin Realized Volatility Is At Three-Year Lows, Tesla Is Eating Bitcoin's Lunch!" Skew Researchers Say
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Bitcoin’s realized volatility hit a three-year low. Data source: Skew.com
Traders are widely expecting a sharp rise in Bitcoin volatility based on increased demand for low-cap cryptocurrencies. SkewData DisplayData Display
Open interest on BitMEX and Bybit rose to $650 million and $500 million, respectively, suggesting that futures traders are expecting market volatility soon. With various indicators pointing to a decisive move in the price of Bitcoin, four key macro indicators show an uptrend.
A number of fundamental factors point to a bullish sentiment for Bitcoin. Data source: Glassnode
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Bitcoin network hash rate hits all-time high
Blockchain.com data shows that the hash rate of the Bitcoin blockchain network hit a new high on July 8, reaching 125.99 EH/s, surpassing the all-time high set in the first week of March, and then Bitcoin fell on Black Thursday. Break $3600.
Indeed, the hash rate dropped to 90.29 EH/s after the halving. But in less than two months, the hash rate has hit new highs again, showing that the mining industry is still healthy and the possibility of a death spiral is extremely low.
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The Bitcoin blockchain network hash rate is at an all-time high. Data source: Blockchain.com
But likely due to a wet season in Sichuan, China, which lowered electricity costs, miners have recovered quickly from the halving pressure, reducing the likelihood of a sudden sell-off that could ease selling pressure on Bitcoin.
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Historically long periods of narrow range volatility have led to bitcoin rallies
At present, Bitcoin has entered a narrow range of fluctuations for the 10th week. In 2012 and 2016, the narrow fluctuation range reached 6 weeks and 15 weeks respectively. Both ranges have resulted in significant gains over the course of several months. Nunya Biznizsaid on twittersaid on twitter
An extended narrow range is considered a bullish trend as it sets the stage for a stronger rally. When BTC bounces within a short-term range, it is prone to a sharp pullback.
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Hash Bands Buy Signal Confirmation
On July 13, Capriole digital asset manager Charles Edwards said that the highly anticipated buy signal for Hash Ribbons had been confirmed. Edwards, who created the indicator, tweeted: "This signal is especially special after halving. It may be a long time before the next one. This is how the big bull market started."
The indicator finds Bitcoin’s lows by evaluating hashrates to predict potential miner capitulation. The indicator is based on a theory that BTC tends to bottom out after miners sell off, or after BTC hashrate hits lows. Both the record high in the Bitcoin hash rate and the confirmation of the buy signal in the hash band suggest that miners have gone through a sell-off phase.
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The "HODLwave" chart created by cryptocurrency investor Willy Woo shows the growth in new demand for Bitcoin. At market bottoms, HODLwave tends to grow due to new money entering the market. Woo on his websiteexplaindeveloped this model: "The upper contour represents supply (old coins that have not moved), and the lower contour represents new demand (new coins that have recently moved). The combined view clearly shows that every bull cycle brings new demand. "
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The “HODLwaves” indicator shows new capital flowing into the Bitcoin market. Data source: Woobull.com
Alistair Milne, Chief Investment Officer, Altana Digital Currency Fundexpressexpress, an increase in HODLing activity signals a bullish trend for Bitcoin. Similarly, Rafael Schultze-Kraft, chief technology officer of Glassnode, an on-chain market analysis company, said based on on-chain data that: "62% of Bitcoin supply has not moved in over a year. 77% of BTC supply is in profit. Many investors can cash out for profit, but they choose to HODL. How can you not be bullish What about Bitcoin?"
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Glassnode researchers have found that external market forces appear to be slowing Bitcoin's upward trend, as Liesl Eichholz, the firm's head of growth strategy, said.pointed outpointed out
As stated: “External market forces, such as systemic uncertainty and unknown correlations with traditional markets, may prevent BTC from breaking out at this stage, but the signal remains strong.”
As Cointelegraph reported on July 15, technical indicators suggest that the U.S. stock market rally is overheating. If the stock market falls, Bitcoin may become increasingly vulnerable to a near-term correction given the near-term correlation between Bitcoin and stocks.
