“Get Ready” for BTC Volatility – 5 Things to Know in Bitcoin This Week

Bitcoin BTC starts another week keeping everyone guessing as a small trading range continues to play out.

A non-volatile weekend continues a familiar status quo for BTC/USD, which remains just above $19,000.

Despite calls for a rally and a run to lower macro lows next, the pair has yet to make a decision on the path – or even signal that a breakout or breakdown is imminent.

After a brief period of excitement seen on the back of last week’s US economic data, Bitcoin is thus back to square one – literally, as its price action is now exactly where it was at the same time last week.

As the market wonders what it might take to crack the lineup, Cointelegraph takes a look at potential catalysts in store this week.

Spot price action makes traders dream of breakouts

For Bitcoin traders, it’s a case of “almost too quiet” when it comes to the weekly BTC/USD chart.

After falling significantly under volatile conditions during the first half of 2022, recent months have seen an almost eerie lack of volatility.

Data from Cointelegraph Markets Pro and TradingView proves the point – on 1-week timeframes, Bitcoin continues to print candles with almost no body whatsoever.

So sticky is the current range that, as Cointelegraph reported, Bitcoin’s Historical Volatility Index (BVOL) is at lows only seen a handful of times.

“Equity volatility (VIX) relative to Bitcoin volatility (BVOL) is nearing all-time highs,” William Clemente, co-founder of digital asset analytics and trading firm Reflexivity Research, added in comments last week.

“This illustrates how much volatility compression Bitcoin is currently experiencing.”

An accompanying chart neatly captured Bitcoin as an odd, stablecoin-like choice in the current climate, with Clemente suggesting that a return to the classic, more volatile paradigm should follow.

The week before, economist, trader and entrepreneur Alex Krueger in addition noted that an “explosive move” had followed all previous trips to macro lows on BVOL.

He argued that US macro data missing expectations “would do it” in terms of reviving volatility, but in the event the numbers remained just below the trigger range.

Cryptocurrency research firm Delphi Digital agreed.

“Historically, when BVOL falls below a value of 25, a large spike in volatility tends to follow shortly thereafter,” the tired in sections of Twitter comments.

This week, meanwhile, popular crypto investor and analyst Miles Deutscher told traders to “get ready” while annotating the Delphi data.

The question for everyone remained the direction in which volatility would take the market.

For Il Capo of Crypto, the trader who predicted Bitcoin’s decline to $20,000 levels from all-time highs, expectations remained the same.

$21,000 should be part of a relief bounce, only to be overshadowed by another dive to multi-year lows for BTC/USD, potentially coming in at $14,000-$16,000.

“Some shitcoins will experience fraud pumps during these days, while $BTC goes to 21k. This can give you the illusion that the bull market is back,” he warned in the weekend.

“My advice: don’t be greedy. Take profit if this happens. Protect your capital.”

New macro triggers lined up for crypto

While little is expected from the Federal Reserve in terms of direct policy changes this week, there is still plenty of fuel for crypto volatility to be delivered by external forces.

In the U.S., company earnings will come thick and fast, with technology stocks particularly apt to move markets should results fall far short of expectations.

Reporting firms represent over 20% of the S&P 500, which like other US indexes has rarely shown weakness this year.

“In my mind, the odds of a low coming in the next week or two are decently high,” Raoul Pal, founder and CEO of RealVision, predicted overnight alongside an accompanying chart.

“SPX weekly DeMark coming next week, near bottom of channel and 50% retracement, with RECORD bearish sentiment.”

The Kobeissi letter charts the week ahead and financial commentary also provides the Kobeissi letter told subscribers to “prepare for more volatility.”

More US data will join earnings this week, it explained, while Fed officials will comment on overall policy.

“The median bear market with a recession dating back to 1929 has fallen 39%,” wrote about stock market strength in one of the various posts at the weekend.

“Additionally, the median bear market with a recession lasts 16 months. We are currently only 10 months in and the S&P 500 is only down 28%. History continues to suggest that more pain lies ahead.”

Beyond equities, the US dollar index (DXY) was mercifully flat into the new week, and has so far avoided another assault on twenty-year highs seen in the past.

Michaël van de Poppe, founder and CEO of trading firm Eight, echoes Il Capo of Crypto’s theory, implied that it may be this week or next that “some relief” comes in for risk assets more broadly.

“A crucial area for Bitcoin, as it is still hovering in the area for more than a month,” he in summary on the day.

“It needs to break $19.4-19.6K clearly. If that happens, volatility could finally kick in. Given the structure of $DXY and the yield, I expect this to happen in 1-2 weeks.”

RSI Breakdown Risk Echo 2018

Further out, the picture for Bitcoin darkens, and the predictive bearish scenarios from current chart data are busy channeling comparisons to the bottom of the 2018 bear market.

Among them is popular analyst Matthew Hyland, who even in his characteristic bullish market has little to celebrate when it comes to the next months BTC price action.

In a chirping this weekend Hyland Bitcoin’s Relative Strength Index (RSI) flagged the repeat behavior seen in the build-up to the 2018 floor.

An accompanying chart clearly demonstrated familiar bear market forces at play, adding to suspicions that Q4 2022 may mirror the scenes of four years ago.

Trading account Stockmoney Lizards confirmed it was “100% in agreement” with the idea, which uses the 3-day chart.

The 2018 RSI breakout structure involved a dive from $5500 to $3100 for BTC/USD – or about 40%.

“Obviously, we’re still waiting for this huge move to come,” Hyland added in a related video about the idea.

He also showed that the classic Bollinger Bands volatility indicator still predicted an incoming storm, with narrower bands requiring a breakout of volatility.

Hodlers remain as determined as ever

Take a look at hodler behavior and it becomes clear that the resolve of the average long-term holder (LTH) remains unwavering.

The latest data from the research firm Glassnode on the chain confirms a five-year high in the number of bitcoins either lost or out of circulation in cold storage.

The “hodled or lost coins” metric put the number at 7,554,982.124 BTC – or 40% of the current supply – as of October 17, meaning more BTC is off the market than at any time since late 2017.

Likewise, distribution also continues an accelerating trend visible through 2022. The number of wallets with a balance of at least one whole Bitcoin is now all-time above 908,000.

While it increases in total through the last half of 2021, the trend has picked up noticeably this year, Glassnode shows.

Analyzing lost coins as part of its weekly newsletter, “The Week On-Chain”, Glassnode, meanwhile, concluded that the current bear market has yet to match others in terms of intensity when it comes to hodlers.

“Network profitability has not quite hit the same level of severe financial pain as previous cycles, but adjusting for lost and long HODLed coins can explain a fair portion of this divergence,” it explained last week.

Nevertheless, when it comes to those used to hodling through bear markets, there appears to be little appetite for capitulation from current price levels.

Fear enters its second month in a row

That doesn’t seem to shake the fear when it comes to sentiment in the crypto market.

Related: “No Emotions” – Bitcoin Calculation Gives $35K as Next BTC Price Macro Low

In a sign that has captured the industry this year, the Crypto Fear & Greed Index has now had sentiment in its “fear” or “extreme fear” for two consecutive months.

Fear & Greed uses a basket of factors to calculate a normalized market sentiment score, and 2022 has delivered results unlike most years.

Earlier, the index saw its longest ever in “extreme fear”, a feat it is currently a month away from repeating.

As of October 17, the index measured 20/100 — about 10 points higher than classic bear market bottoms, but a whopping 14 points higher than the year’s low.

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trade involves risk, you should do your own research when making a decision.