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Bitcoin Volatility Set to Surge: Key Indicators Point to Imminent Price Move

Bitcoin's prolonged sideways trading between $18,000 and $25,000 has sparked expectations of a significant price move. Key indicators suggest that a surge in volatility is imminent.
Published on 2022-10-18

Bitcoin's Current Market Situation

Bitcoin has been trading sideways between $18,000 and $25,000 for 126 days, with its lack of volatility dominating discussions among traders. This extended period of stability has led to a consensus that a significant price move is nearing.

Key Indicators Suggesting Increased Volatility

Several data points are signaling an impending surge in Bitcoin's volatility:

  1. Bitcoin 1-Week Realized Volatility: This metric has dropped to historically low levels, suggesting that a breakout is likely.
  2. Adjusted SOPR (Spent Output Profit Ratio): The SOPR, which measures profitability in Bitcoin transactions, is showing signs of a potential trend reversal.
  3. Short-Term Holder SOPR: This indicator highlights the behavior of investors holding Bitcoin for less than 155 days, pointing to increased activity that often precedes price movements.
  4. Bollinger Band Width Percentile: The narrowing of the Bollinger Bands indicates a buildup of energy in the market, which could lead to a sharp price swing.
  5. Bitcoin Futures Open Interest: Rising open interest in Bitcoin futures suggests increased speculation and leverage, further amplifying the potential for volatility.

Conclusion

The combination of these indicators paints a clear picture: Bitcoin's calm market is unlikely to last. Traders should prepare for a significant price move as volatility is expected to spike in the near term.

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