Bitcoin strategists are waiting for a bias-defining price move as the cryptocurrency’s historical volatility falls to its lowest in three months.
Jan Uytenhout, the co-founder of Capriole Investments in Denmark, iterated the outlook in a tweet issued earlier this Wednesday. The fund manager cited old references to show a correlation between the Bitcoin price and its historical volatility index.
He noted that the cryptocurrency undergoes sharp price moves regardless of its direction whenever its volatility falls below 20, based on readings from a technical indicator. For instance, in late July 2020, the BTC/USD exchange rate climbed 11.37 percent, just as its volatility dipped below 20. The chart below illustrates it.
Bitcoin chart showing its price-volatility correlation. Source: TradingView.com
In another instance, the pair dived lower by 12 percent on a lower volatility alarm.
Bitcoin Bias-Conflict
In retrospect, Historical Volatility works least when it comes to predicting future price trends. At best, it merely shows how far an asset has moved away from its moving average price. That shows how even a healthy