Bitcoin price volatility in the markets has hit a near 5-month low, leading to speculation about an emerging bull rally over the coming days.
Volatility has continued to fall since the highs of $13,800 in late June, delivering lower highs and higher lows ever since. According to some analysts, this Bitcoin price volatility is often indicative of an upcoming rally.
Technical data shows a narrowing of the trading range for BTC, particularly in the last two weeks. Over the period, prices have consolidated between $9,850 and $10,950.
A look at bitcoin price charts confirms the possibility of a rally. Analysts are pointing to a number of technical indicators suggesting a surge could be imminent.
CoinDesk analyst Omkar Godbole said the decline in volatility is usually a precursor to more significant moves in bitcoin prices.
“Bitcoin’s price volatility, as represented by Bollinger bandwidth, has hit the lowest level since May 3, and is closing on a level seen ahead of violent price swings in the past. While technical charts are increasingly favoring a downside move, bitcoin’s non-price metrics continue to call a bullish move, which, so far, has remained elusive.”
Investors Should Remain Wary Of Bitcoin Price Volatility
However, he suggested that investors should remain cautious about the risks of a decline over the coming days. While bullish signs are there, there remains an outside chance of a switch to bear conditions.
“BTC risks falling to $9,855 (Sept. 11 low) in the next couple of days and could extend the decline toward $9,320 (Aug. 29 low). The bearish case would weaken above Sept. 13’s high of $10,458. The outlook, as per the daily chart would turn bullish above $10,956 (Aug. 20 high).”
With the signs from technical analysis pointing towards another rally, bulls will be looking towards the next breakthrough.
As ever, there is downside risk, and the direction of travel for BTC remains uncertain. However, according to Godbole, a move beyond $10,956 would end bear speculation and confirm a more concrete move into bullish territory.
At the time of writing, BTC was trading at $10,180, down around 0.47% on the day. Traders will no doubt be watching closely in the hope of anticipating bitcoin’s next move.