New record low for Bitcoin’s realized volatility – What’s the future?

Key Points

• Bitcoin’s one-week realized volatility has dropped to 23.42%, nearing historical lows.
• This low volatility has historically indicated significant market moves, often leading to breakouts.

Bitcoin’s one-week realized volatility has decreased to 23.42%, nearing its historical lows. Over the past four years, this level has only been breached a few times, specifically in October 2024 and November 2023.

These instances of low volatility have often been a precursor to major market moves, making it a significant metric to monitor.

Bitcoin’s Volatility Compression

The realized volatility chart shows a steady decline in Bitcoin’s volatility since late 2024. The current reading is around the 23% zone.

Sharp decreases in volatility have historically led to significant price swings, often setting the stage for breakouts. When volatility is suppressed, it tends to build up pressure in the market, leading to strong moves in either direction. This is particularly true when Bitcoin is trading near key technical levels.

Bitcoin’s Current Market Trends

Bitcoin’s current trading price is $96,450, showing a slight increase from its previous levels. However, Bitcoin is struggling to stay above its 50-day moving average of $98,186, but it remains above the 200-day moving average of $97,764.

The Bollinger Bands are tightening, indicating a possible price move. The Choppiness Index is at 48.53, suggesting that the market is not in a strong trending phase but is nearing the end of its consolidation period.

With realized volatility nearing historical lows, the market may be gearing up for a decisive move. If Bitcoin maintains support around the $96,000 – $97,000 range, a breakout above $98,500 could trigger further upward momentum. Conversely, if Bitcoin fails to sustain its current levels, it may retest support around $94,000 before any significant recovery.

Investors and traders should look out for signals of volatility expansion, such as widening Bollinger Bands and increased trading volume, to confirm the direction of the next significant move.