Bitcoin Volatility Expected to Increase, According to Bitfinex Report
A recent report from crypto exchange Bitfinex suggests that bitcoin (BTC) is likely to see heightened volatility in the coming months. The report highlights that the crypto market is currently experiencing one of the longest periods of low volatility in Bitcoin’s history. However, this trend appears to be changing as the asset’s 24-hour volatility recently spiked by 1,200% within nine hours, propelled by its surge past $30,000 and up to $35,000.
Bitfinex analysts state, “As volatility continues to attempt to sustain beyond historical averages, we are potentially at the end of one of the longest low volatility environments in Bitcoin’s history.”
Predictions of Heightened Volatility Confirmed
Previous editions of the Bitfinex Alpha report predicted increased volatility for BTC in the coming months, and recent events have validated those predictions. Traders were already preparing for a turbulent period due to Bitcoin’s sudden decline after a period of stagnation. On-chain indicators also supported these expectations.
The brief price surge from $28,000 to $30,000 on October 16 confirmed Bitfinex’s forecasts. Although triggered by unverified news about the U.S. Securities and Exchange Commission approving BlackRock’s spot Bitcoin exchange-traded fund application, this move indicated a period of volatility.
On-chain indicators suggest that the market will continue to experience volatility in the coming months. Metrics like the Estimated Leverage Ratio indicate short-term consolidation and a ranging market before further volatility occurs.
Largest Short Liquidations Since August 17
Despite BTC’s brief surge on October 16, the asset fell back to $28,000, resulting in the largest short liquidations since August 17. The initial liquidated amount was $136 million, but subsequent volatile swings caused $187 million in liquidations across long and short positions.
Bitfinex analysts note, “Last week’s moves underscore the sensitivity of the crypto market to high volume trades, especially during low liquidity periods.”
Hot Take: Bitcoin Volatility on the Horizon
The Bitfinex Alpha report highlights that bitcoin is currently undergoing a shift in volatility levels, potentially signaling the end of one of its longest periods of low volatility. Recent events have confirmed predictions of increased volatility, with on-chain indicators supporting this notion. Traders should be prepared for choppy waters ahead as BTC experiences more significant price swings in the coming months. It is essential to monitor market conditions closely and adjust trading strategies accordingly to navigate this period of heightened volatility.
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