Volatility Vanishes: Is The Bear Market Coming To An End?

  • Recent technical analysis shows that Bitcoin’s volatility is declining daily, hinting that there could be a move up coming soon.
  • As Bitcoin rests at $6,550, many traders are confident that the bear market is over.

The past week has been a boring one for Bitcoin traders. The price of Bitcoin has been sitting comfortably around $6,550, so much that traders are joking that “Bitcoin is the new stablecoin.”

However, some traders are suggesting that this lack of price action means a big move could be brewing.

Bollinger Bands

To understand where the price is going, let’s take a look at the Bollinger Bands.

Bollinger Bands are a technical analysis tool created by taking a twenty-period moving average (the middle line), then adding and subtracting a standard deviation calculation to create the outside bands. When the bands get wider, volatility is higher, and when they contract, volatility is declining.

Lower volatility often implies that big moves are coming soon.

For this analysis, we’ve also included the Bollinger Band Width (BBW) on the bottom of each chart. This indicator is a measure of how wide the bands are, in order to better judge an asset’s volatility. The BBW is calculated as such:

Bandwidth = (upper band− lower band) / middle band

With that out of the way, let’s take a look at how the Bollinger Bands have been behaving lately. Here’s the daily chart since March:

bb1.png

Daily Bollinger Bands Width is reaching all-time lows. You can visually see on the chart how the bands are squeezing.

You can also notice how price has been stagnant for the past two weeks.

Remember, the middle line is the 20-day moving average. The 20-day moving average has been flat at $6,580, meaning the price has barely budged.

We can see that the daily volatility has declined, but what about on a larger time frame? To look at the bigger picture, here’s the weekly chart:

bb2.png

The weekly chart takes into account the enormous bull run of 2017, so you can see that the bands exploded in June and November of last year. Since 2018 began, however, the bands have slowly been tightening. Right now, they’re at their lowest YTD.

However, this means that a move up could be coming.

Next, we’ll take a look at previous times that the weekly Bollinger Bands squeezed. The chart above shows one instance, in November 2017, when the bands squeezed and the bull market began.

Zooming out, we see that most times the bands squeezed, the price shot up.

bb3.png

Lastly, let’s look at the BitMEX volatility index. This is a calculation done by BitMEX to measure daily volatility. They use a different calculation than the BBW, but it still shows that volatility is at yearly lows. The last time volatility reached this low was in April of 2017.

bb4.png

End in Sight?

Does all of this data mean the bear market is over? The answer is - It’s hard to tell. The market has been in a downtrend all year, but as the selling slows down, traders seem to be becoming more optimistic about a return to higher prices.

The Bitcoin Update: Price Action, Futures, Halving, and Security

Siamak Masnavi

This article provides: an overview of how Bitcoin (BTC) has been doing over the past 24-hour period; a recap of interesting recent news that might have affected its price (or might do so in the future), and useful observations from Crypto Twitter.

Bitcoin Price Action

BTC-USD 24 Hour Chart - 22 Oct 2019.png

According to data from CryptoCompare, as you can see in the above price chart, the Bitcoin price has been mostly hovering in the range $8,150 and $8,300 during the past 24-hour period. 

Crypto analyst/trader Josh Rager says that Bollinger Bands suggest that the next volatile move could come soon:

Bitcoin Futures

Although trading volume in institutional BTC products decreased in September, as described in the recently-released CryptoCompare Exchange Review report for September 2019, "long positions held by institutional accounts at the CME have been rising again in October" according to crypto data analytics startup Skew:

The Next Bitcoin Halving

As you probably know already, once every 210,000 blocks (approximately every four years), there is a Bitcoin halving event (where the block mining reward is halved, such that miners receive 50% less BTC for verifying transactions); these Bitcoin halving events keep on occurring until the maximum supply of 21 million bitcoins has been minted.

Well, the next Bitcoin halving event is estimated to occur around 14 May 2020; this is when the block mining reward will decrease from 12.5 BTC to 6.25 BTC.

Alistair Milne, Co-Founder and Chief Investment Officer (CIO) of cryptocurrency-focused hedge fund Altana Digital Currency Fund (ADCF), tried to explain yesterday via the following what next year's Bitcoin halving will mean to BTC sell-side pressure:

Offline Storage of Private Keys

Yesterday, UK-based firm Sword Ltd announced the official launch of Cryptosteel Capsule, a 100% stainless steel device (shockproof, waterproof, acid-resistant, and fireproof up to 1400C/2500F) for offline storage of valuable data such as private keys and passwords. 

Cryptosteel Capsule Screenshot.png

Cryptosteel Capsule costs between 89 and 329 euros depending on the variant being ordered.

Jameson Lopp, CTO at Casa, received one of these gadgets at last weekend's Lightning Conference in Berlin Germany, and he put it in his carry-on luggage for the flight back home to the U.S.. Unfortunately, airport security officers in Germany were not too impressed:

 

Featured Image Credit: Photo via Pexels.com. Photo of CryptoSteel Capsule Courtesy of Sword Ltd.