Data shows that Bitcoin volatility is currently at historic lows, something that has led to violent price movements in the past.
Bitcoin’s 7-Day Range Recently Compressed to Just 3.4%
This is evident from data from the on-chain analytics company Glasnsode, the current 7-day price range is similar to January levels this year. Bitcoin’s “7-day price range” here refers to the percentage difference between the high and low that the value of the asset has seen over the past seven days.
This statistic can provide hints about the recent volatility the cryptocurrency has been experiencing. If the indicator has a low value, it means that the price action from the past week was quite old. This, of course, suggests that the volatility of the asset is currently low.
On the other hand, high values of the 7-day price range imply that the coin has experienced a high degree of fluctuation over the past seven days, and therefore volatility was high.
Now, here is a chart showing the trend in the Bitcoin 7-day price range (as well as the 7-day high and low) over the past few years:
The value of the metric seems to have been quite low in recent days | Source: Glassnode on Twitter
As can be seen in the chart above, the Bitcoin 7-day price range had naturally succumbed to fairly low values during the bear market lows that followed the FTX crash, as BTC price was stuck in a sideways move.
These low readings of the indicator continued into the new year as the coin refused to show any significant movement. Shortly thereafter, however, the value of the metric had seen an explosion as the rally began to take place.
In the following few months, the cryptocurrency’s 7-day price range had reached relatively high values, but recently the indicator has seen another decline.
Of course, the reason behind this fresh decline is the narrow band of consolidation that the asset has tracked over the past week between the $27,400 and $26,500 levels.
Due to this low volatility, Bitcoin’s 7-day price range has collapsed to just 3.4%. On the chart, Glassnode has also highlighted the past instances where the cryptocurrency had seen this metric drop this low.
It seems that the indicator has already fallen to similar levels in July 2020, and the aforementioned lows from the beginning of the year had also seen the indicator reach such values.
An interesting thing to note about both of these periods of low volatility is that the price experienced rapid price action not too long after they occurred, and the first low was followed by the 2021 bull run, while the ongoing rally was the last succeeded. An.
If the current compressed 7-day Bitcoin price range follows a similar pattern, then wild price action could be in store for the cryptocurrency in the near future.
BTC price
At the time of writing, Bitcoin is trading around $26,800, down 2% over the past week.
Looks like BTC has been moving sideways in the last few days | Source: BTCUSD on TradingView
Featured image by Maxim Hopman on Unsplash.com, charts from TradingView.com, Glassnode.com