Bitcoin Volatility Creates Fresh Low, Here’s What It Means For The Digital Asset

BVOL tapped an all-time low on Christmas. It is worth noting that periods of significantly low volatility usually precede periods of explosive price moves. 

Bitcoin Volatility index BVOL created a new all-time low on Christmas per a tweet from Reflexivity Research co-founder Will Clemente yesterday, sharing a chart of the popular BITMEX-provided index.

Bitcoin's volatility is at an all-time low pic.twitter.com/sGOIC7cM6e

— Will Clemente (@WClementeIII) December 25, 2022

Notably, the leading crypto asset flatlined most of the day, trading in a very tight range around the $16,800 price point. Material Science (@Mtrl_Scientist), a popular market analyst, joked that the most prominent digital asset by market cap was moving like a stablecoin. 

If Christmas were all year round, BTC would be a suitable stablecoin pic.twitter.com/6a3bScA1Px

— Material Scientist (@Mtrl_Scientist) December 25, 2022

It is the second time this quarter that the leading digital asset has tapped significant levels on the BVOL index. In October, the index dropped below 25. As highlighted by Economist Alex Krüger, it usually precedes a massive price move.

For context, Michaël van de Poppe, Eight founder CEO, highlighted that it preceded the crash to $3k in 2018, the rally to $14k in 2019, and the start of the 2021 bull run.

A very big move is on the horizon for #Bitcoin, as $BVOL drops sub 25.

Historically, that's a guaranteed recipe for massive volatility.

1; crash to $3K in 2018.
2; break above $4K to $14K in 2019.
3; break above $10K in 2020 (kickstart bull 2021).

C/ @krugermacro pic.twitter.com/QvKXT9Ql28

— Michaël van de Poppe (@CryptoMichNL) October 10, 2022

Notably, in this instance, it preceded a run-up to over $21k in early November before the asset price plummeted to 2-year lows in the wake of the FTX collapse. With the index at record lows, we are likely on the brink of a significant price move. However, it is anyone’s guess which direction the price will go.

Crypto research platform Delphi Research yesterday highlighted that Bitcoin had seen a 76% price decline from its previous all-time high. In contrast, the researchers pointed out that the asset price saw an 85% decline in the last two major bear markets, indicating that we may not be at the bottom yet.

#BTC is down ~76% from its prior all-time high.

For context, the price of BTC fell ~85% from peak-to-trough in each of the last two major bear markets. pic.twitter.com/dRc68DrsBw

— Delphi Research (@Delphi_Digital) December 25, 2022

By highlighting this same metric in November, veteran trader Peter Brandt noted that an 85% decline would take Bitcoin to the $10,350 price point.

At press time, Bitcoin is trading at the $16,871 price point. It is up 0.23% in the last 24 hours.