Bitcoin: Volatility may be incoming thanks to a hike in this metric

  • BTC’s price has risen significantly in the last 7 days
  • Due to a hike in activity, price volatility is starting to climb too

Growing demand for Bitcoin [BTC] over the past week has led to the crypto recording a 10% uptick in value over the last seven days.

Read BTC’s Price Prediction 2023-24

During the intraday trading session on 20 October, the 50% surge in trading volume contributed to the coin trading briefly above $29,000 for the first time since mid-August, Santiment revealed

Source: Santiment

Indicators hint at looming price swings 

An assessment of the activity of BTC’s short-term holders (3-6 months) revealed a significant surge in the spent outputs for investors within this age band on 19 October. On that day, over 125,000 dormant BTC coins changed addresses. 

In fact, data retrieved from CryptoQuant showed that this represented the largest single movement of dormant coins for this investor cohort since May.

Source: CryptoQuant

The movement of these previously dormant coins is a sign that their holders tried to take advantage of BTC’s price rally to book profit. 

However, if a large number of previously dormant BTCs are being spent at once, as seen on 19 October, it typically suggests a shift in market sentiment or strategy among holders. 

This kind of movement contributes to increased volatility in the BTC market, pseudonymous CryptoQuant analyst Mignolet noted in a recent report. “We might see significant volatility soon,” the analyst said.

An assessment of a few volatility markers on the coin’s daily chart confirmed the analyst’s position. For example, BTC’s Chaikin Volatility indicator has trended upwards since 15 October. 

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This indicator measures the difference between an asset’s high and low prices over a specified period. Generally, when the Chaikin Volatility indicator rallies to return higher values, it signals great price movements and potential volatility. 

This indicator had a reading of 32.77 at press time, having climbed by 206% since 15 October.

Likewise, BTC’s Average True Range (ATR) showed that volatility has risen steadily over the past week. This indicator measures market volatility by calculating the average range between high and low prices over a specified number of periods.

With a reading of 774.22 at press time, the ATR highlighted the possibility of significant price swings in the coming days.

Finally, the coin’s Bollinger Bandwidth (BBW) also grew over the past week, confirming the presence of volatility in BTC’s market. At the time of writing, this indicator was returning a value of 0.12, positioned in an uptrend. 

Source: BTC/USD, TradingView

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