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Bitcoin continues its sideways movement above $60,000, while volatility has fallen to extremely low levels. According to analysts, this situation increases expectations that a sharp price movement may occur in the market in the coming period.
At this point, Sean Farrell, Head of Digital Asset Strategy at Fundstrat, stated in his latest assessment that Bitcoin could move approximately 30% up or down from its current level within the next two months.
According to CNBC, Sean Farrell noted in a recent memo to clients that Bitcoin volatility is approaching record lows.
Farrell noted that in past periods of similarly low volatility, Bitcoin experienced approximately a 30 percent price movement in either direction over the following 60 days.
Bitcoin Movement Could Be Big, But the Direction Is Uncertain!
Farrell noted that there have been eight separate instances in the past where volatility has been this low. He explained that four of these instances saw an increase, while the other four saw a decrease.
Therefore, the analyst emphasized that the current data does not definitively show the direction of Bitcoin’s next move, pointing out that the real highlight might be the magnitude of the movement.
In other words, the analyst warns that the current period of low volatility in Bitcoin could herald a sharp breakout in the coming weeks.
What’s the Reason for Bitcoin’s Recent Rise?
Fundstrat analyst Farrell also commented on Bitcoin’s recent rise. According to the analyst, the recent recovery in $BTC may have been driven by the closing of short positions rather than strong spot demand.
According to the analyst, while the Bitcoin price rose after August 14th, the amount of open interest in perpetual futures contracts also decreased by approximately 8 percent. This indicates that some investors in the market closing their short positions pushed the price upward.
At this point, Farrell recalled that a similar situation was seen in June and early July, noting that closing short positions during those periods boosted the Bitcoin price, but was followed by significant drops.
Finally, the analyst emphasizes that periods of low volatility in Bitcoin should be closely monitored. While historical examples show that significant price movements in $BTC can occur after volatility drops to extremely low levels, the analyst notes that the estimated 30% movement does not necessarily mean it will be bullish or bearish.
*This is not investment advice.
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