Recent data indicates a notable decline in the weekly volatility of Bitcoin, a phenomenon that has historically preceded significant price movements, often leading to sharp decompression in the asset’s value.
Bitcoin’s 1-Week Realized Volatility Reaches Low Levels
In a recent analysis shared on X, CryptoQuant author Axel Adler Jr discusses the current trends in Bitcoin’s Realized Volatility. The Realized Volatility serves as an indicator measuring the asset’s volatility based on its percentage returns over a defined time frame.
For this analysis, the relevant time frame is one week. This specific metric evaluates the percentage difference between the highest and lowest price points of Bitcoin during the past week.
Below is the chart illustrating the trend of this indicator over the last few years:
The chart reveals that the 1-week Realized Volatility of Bitcoin has recently dropped sharply to a critical low of 8.7%, a relative low for this cycle. This metric has only dipped below this threshold a handful of times previously.
Analyzing the chart, Adler Jr highlights instances where the Realized Volatility has touched or fallen beneath this level. Historically, such drastic compression of Bitcoin’s volatility has been succeeded by violent price swings, although the subsequent direction—whether bearish or bullish—has varied across cycles.
For instance, the last time the 1-week Realized Volatility dipped to this extent coincided with a bullish surge in Bitcoin’s price, whereas an earlier instance led to bearish market conditions.
Adler Jr also notes that Bitcoin is currently hovering near its 111-day moving average (MA), a significant benchmark historically. He comments, “If conditions do not improve, the next move could be a drop to $92K, below the 111DMA.” This assessment indicates that market participants should remain vigilant as potential volatility looms on the horizon.
In additional insights, the Bitcoin Net Taker Volume, which tracks the differential between taker buy and sell volumes, has recently dipped into negative territory. This trend suggests that short volume is currently exceeding long volume, pointing towards a bearish sentiment among derivatives traders. Interestingly, as highlighted by analyst Maartunn on X, this pattern has often signaled a local bottom for Bitcoin during the ongoing phase of market consolidation.
Current BTC Price
As of the latest updates, Bitcoin is trading at approximately $97,400, reflecting a 1% increase over the last 24 hours.
