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Why it’s worth keeping an eye on Bitcoin’s volatility

Bitcoin, at the time of writing, was trading near its last ATH of $ 52,547, with the crypto falling short of its 2017 ATH of less than $ 20,000. In fact, its market cap was just under $ 1 trillion. So what? Well, if the price continues to climb at the same rate, a 10x increase would cause the market cap of gold to fall.

Volatility

The volatility of the crypto asset is currently just over 14%, especially after the price hit its last ATH on the price charts. Here, it is important to note that the volatility of BTC fell by more than 10% to reach this level. Interestingly, compared to the volatility of other assets, emerging currencies have higher volatility, 35%, compared to Bitcoin.

Even at a price point of $ 51,000, how can volatility be 14.45% and what does that mean for the future of the price increase? Well, this is clearly a sign that the volume of Bitcoin being traded on the exchanges and its demand is not high enough to keep the price at the press time level. Here it is also worth looking at other metrics. Bitcoin volatility at 14.45%, what to expectBitcoin volatility at 14.45%, what to expect

Source: Woobull Charts The total number of Bitcoin contracts outstanding on all derivatives exchanges is steadily increasing. This can be understood from the following table,

Bitcoin volatility at 14.45%, what to expectBitcoin volatility at 14.45%, what to expect

Source: CryptoQuant

Bitcoin’s open interest on exchanges has formed a pattern since September 2020, based on which it is expected to rise in the following weeks, as the chart shows. Since the model appeared at the end of 2020, it may or may not continue until 2021. The success of the model will depend on the hands of the trader.

The volatility of the asset and the number of Bitcoin contracts are not the only indicators calling for a trend reversal in the price of Bitcoin. The trade volume and metrics on derivatives exchanges are critical to the sentiment of retail traders. Institutional traders generate demand, purchases and HODLs, but this has long term consequences.

An immediate impact comes from the activity of retail traders on spot exchanges and derivatives. Traders can expect a short term correction due to the loss of volatility, however, there is enough stable coin and interest flow on derivatives trading for a rebound to its ATH levels. later.

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