Bitcoin Realized Volatility Has Declined To Extreme Lows Recently

In a post on Medium, CryptoQuant author Axel Adler Jr has discussed about the latest trend taking place in the Realized Volatility of Bitcoin.

Historically, when the Bitcoin 1-week realized volatility drops below 10%, the cryptocurrency tends to experience a sharp burst of volatility.

Data shows that the Bitcoin Realized Volatility metric has fallen to historically low levels. Here’s what usually happens next.

In a recent post on CryptoQuant,链上作者Axel Adler Jr. discussed the latest trend forming in Bitcoin’s Realized Volatility.

As a reminder, the Realized Volatility is an indicator that tells us how volatile an asset has been based on its price returns within a specified window.

When the value of this metric is high, it means that the asset experienced a large number of fluctuations during the period. On the other hand, a low indicator implies that the price action has been stale for the asset.

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Here’s a chart that shows the trend in 1-week realized volatility for Bitcoin over the last several years:

Bitcoin 1-Week Realized Volatility has fallen to extreme lows recently. Source: CryptoQuant

As the graph above shows, the 1-week Bitcoin Realized Volatility recently declined to very low levels of around 7%.

This is so extreme that only ten other instances in the past six years have seen the metric go similarly low.

This indicates that the recent consolidation in the cryptocurrency has been among the tightest in its history; as for what this trend in the indicator could mean for the cryptocurrency, maybe past patterns will offer some insight.

A look at the chart shows that such stale price action in the asset usually unwinds with a burst of sharp volatility.

The latest instance occurred right before the rally to the new all-time high (ATH).

Given this pattern, it’s possible that the recent BTC consolidation could also lead to another sharp move for the cryptocurrency.

However, something to note is that the volatility coming out of lows in the Realized Volatility has historically gone either way, suggesting that the price move coming out of this tight range could just as well be a crash.

It remains to be seen how the Bitcoin price will continue to trend, especially after the historically stale action it has seen over the past week.

Mt. Gox BTC Movements Impacting On-Chain Metrics

In other news, as Axel pointed out in another recent post on CryptoQuant, the recent movements from the bankrupt exchange Mt. Gox have caused several on-chain indicators to show false signals.

The analyst used the Bitcoin Adjusted Spent Output Profit Ratio (aSOPR) chart as an example.

aSOPR tracks the net profit or loss that investors across the network realized. Since the Mt. Gox BTC had been sitting in wallets for a very long time, its movement “realized” a large amount of profit.

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Of course, this spike in the indicator isn’t actually a sign of profit-taking, so it’s not a signal that would impact the market.

BTC’s price has declined over the past day as its price is now down to $66,800.