Bitcoin could be close to an explosive move as the asset experiences a period of unusually low volatility, which historically does not tend to last.

Bitcoin voltaility

In the past month, Bitcoin has hovered just below the $30,000 mark, with moments of intermittent dips and rallies. The lull coincided with a cooling off period following the coin’s spectacular rebound in the first two quarters of 2023. Year-to-date, Bitcoin has gained 80%, down from 90% through mid-July.

Possible catalysts for a breakout move include a pending Spot ETF application from global asset manager BlackRock, and others (ARK), the acceptance of which would introduce the first on-demand-ETF for the cryptocurrency. On the other hand, investors remain cautious as to a possible 2022-style crash, potentially on the back of the apparently declining financial health of Justin Sun’s Huobi exchange.

Noting the August 13. deadline for the SEC’s response to ARK Invest’s ETF application, Bendik Schei and Vetle Lunde of K33 Research said: “an approaching ETF verdict may disrupt the slow phase of the market of late. Whether the SEC postpones, rejects or approves ARK’s filing could ignite volatility in the market.”

Bitcoin exchanges hands at $29,800 at the time of writing, after gaining nearly 4% on Tuesday.

Repeat patterns

Bitcoin volatility tends to enter into a lull period which precedes explosive moves. Per the above chart, 13 Nov. 2018, 27 March 2019, 22 July 2020, 26 Oct. 2022, 6 Jan. 2023, were all followed by strong upward or downward price movements. Historically, Bitcoin’s propensity for volatility increases as BVOL falls between the 26 and 9 point range. BVOL stands at 10.72 at press time.

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