Bitcoin price is well over $ 50,000, but there’s no denying that some of the momentum the asset had earlier in the year has been lost. A decrease in volatility could also indicate that the “hype run” is “over” for the time being.
But instead of seeing a sizeable correction, Bitcoin price action could instead trade sideways for much longer, which would be “healthy” before reaching new record highs.
Vanishing volatility could indicate that the Bitcoin hype has subsided
The leading cryptocurrency by market capitalization has been the focus of the financial world during the ongoing pandemic. Unprecedented money pressures to fund stimulus packages made hyperinflation a reality, but turned the world’s attention to Bitcoin.
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With the money supply growing exponentially, the supply of the cryptocurrency remains limited to just 21 million BTC. This has resulted in the price per coin rising from less than $ 4,000 less than a year ago to up to $ 58,000 at its current high.
The uptrend has revived interest in crypto as a whole, however the “hype run” may be coming to an end due to the dwindling volatility.
Bitcoin volatility disappears over time Source: Arcane Research
Sideways price moves are “healthy” before new bull market highs are hit
Arcane Research’s latest market report points out that Bitcoin volatility – a trait the asset is notorious for – peaked in February along with the local high.
Since then, volatility has decreased, which the report said “could indicate that the” hype-driven “Bitcoin run has peaked”.
The biggest crypto fever seems to have vanished after Elon Musk said the top coin was overvalued, which was exactly the case when BTC market cap topped $ 1 trillion for the first time.
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The dollar is also starting to awaken and the stock market is showing signs of weakness that could put crypto at downside risk. However, the report says the downside is not necessarily imminent. Instead, Arcane Research is revisiting 2017 before the final foray into the bull market summit began.
“Bitcoin spent almost half of its bull run in 2017 in a sideways trend that is only healthy before hitting new highs,” the report said.
Bitcoin could see a lot more sideways in the near future Source: BTCUSD on TradingView.com
The table above shows that there were at least three periods of sideways movement before an ascent occurred. So far, Bitcoin has only completed one of these phases and is in the middle of another wave of consolidation.
If history repeats itself, the current sideways price move could be much longer, and another similar trading range could precede the last parabolic push.
Featured image from deposit photos, charts from TradingView.com
