The historical data of the Bitcoin Volatility Index indicates that the price of the cryptocurrency may notice a significant movement in the near future.
Bitcoin Volatility Index Has Been Below 25
As an economist pointed out, TwitterThe volatility index has fallen into an area it has historically followed with an explosive move in bitcoin.
The “volatility indexIn question is BitMEX .BVOL According to the exchange, the value of the metric is “the 30-day annual traded volatility of the day from 11:30 UTC to 12:00 UTC weighted average price (TWAP) for Bitcoin/US dollar.”
Here, the time-weighted average price is calculated using measurements made at 1-minute intervals for half an hour.
What this indicator tells us is how much recent BTC price deviated from the mean, or more simply, how much it has fluctuated recently.
High values of the scale indicate that the cryptocurrency has shown some sharp moves lately, while low values indicate a stale market.
Now, below is a chart showing how the value of the Bitcoin volatility index has changed over the past few years:
The value of the metric seems to have been quite low in recent days | Source: Alex Krüger on Twitter
As you can see in the chart, the analyst has identified relevant trend points between the Bitcoin Volatility Index and the cryptocurrency price.
It appears that whenever the index drops below the value of 25, and later falls below the level, the price of BTC has seen some significant moves that make the value of the scale go up.
There have been three cases of this trend over the past few years, two of which involved an upward movement of the price, while the third case has a crash.
From the chart, it is clear that the Bitcoin volatility index has fallen back to this historical area with the current BVOL value being around 24.59.
If the same trend as in the previous cases now also follows, then the encryption may go in another direction big movement In the near future.
At the time of writing this report, Bitcoin price It is floating around $19.4K, up 1% in the past seven days. Over the past month, the cryptocurrency has lost 9% of its value.
The chart below shows the currency price trend over the past five days.
Looks like the value of the crypto has mostly been moving sideways during the last few days | Source: BTCUSD on TradingView
Featured image from Kanchanara on Unsplash.com, charts from TradingView.com