Bitcoin (BTC) Volatility Hits Lowest Level Since July 2020

• On-chain data reveals that Bitcoin’s volatility is at its lowest since July 2022.

• Bitcoin’s price has exhibited little inclination to rise or fall and has been consolidating around the $30K level for the past few weeks.

The world’s largest cryptocurrency, Bitcoin (BTC), has experienced minimal movement and extremely low volatility in the past week. On-chain data reveals that Bitcoin’s volatility is at its lowest since July 2022.

Historically, whenever Bitcoin’s volatility has been subdued, it has often led to a significant upward rally. Crypto analyst CrediBULL crypto pointed out that there was an expansion to the upside in 8 out of 9 instances with such low volatility. The only exception was a six-month consolidation period following the 2017 parabolic blow-off top.

8 out of 9 times volatility was this low we saw expansion to the upside. The one time that we didn’t was after 6 months of consolidation that followed the 2017 parabolic blow-off top.

Place your bets, mine is 🆙 BIG. $BTC https://t.co/W7JkgSg6KM

— CrediBULL Crypto (@CredibleCrypto) July 31, 2023

Currently, Bitcoin is trading at $28,831, showing a 1.91% decline and having a market cap of $560 billion. Nonetheless, based on historical patterns, this consolidation in Bitcoin’s price might fuel the next price rally for BTC. Additionally, the Bitcoin ecosystem has seen continued growth with the creation of 5 million new wallets in the past year, indicating increasing participation from new players.

Over the past year, more than 5 million wallets holding #Bitcoin have been created. Imagine the entire population of Costa Rica, Palestine, or Singapore buying $BTC in just 12 months. pic.twitter.com/9OrnJYEpHI

— Ali (@ali_charts) July 31, 2023

DeFi Platform Exploit Triggers Market Sentiment

The recent major exploit of the DeFi platform Curve Finance has caused negative sentiment and selling pressure across the broader crypto market. Bitcoin (BTC) and altcoins have experienced selling pressure, with altcoins correcting 2-5 percent more in the past 24 hours.

Furthermore, as the BTC price falls below $29,000, the selling pressure becomes evident, potentially pushing Bitcoin down to its next support level at $27,500. CrediBuLL Crypto points out that although the recent events concerning $CRV seem to be settling down, some uncertainties still need to be addressed within 48-72 hours before the focus can fully return to the charts. From a technical perspective, the price drop is not yet over.

Bitcoin Hits Lowest Price in Over a Month and a Half

Bitcoin broke its days of sideways trading with a downward move, disappointing the bulls. The cryptocurrency slipped below $29,000, marking its lowest price in a month and a half, leading to nearly $100 million in liquidations. Previously, the market had been notably calm, an unusual occurrence in the volatile crypto space. Bitcoin had maintained a tight range between $29,000 and $29,500, with the $29,000 level acting as resistance. 

However, during the early Asian trading session on Tuesday, Bitcoin dropped to $28,750, the lowest since June 21. Although it recovered slightly, BTC and most altcoins experienced losses, with Dogecoin, Solana, Litecoin, Bitcoin Cash, Avalanche, Polygon, and Stellar down by 3-5% in a day. Over-leveraged traders, particularly those with long positions, were adversely affected, with total liquidations nearing $100 million and more than 35,000 traders liquidated in the past 24 hours. Bybit recorded the largest order worth over $1 million.

Bitcoin’s Consolidation around $30K Level

Bitcoin’s price has exhibited little inclination to rise or fall and has been consolidating around the $30K level for the past few weeks. Although this price action does not provide clear indications, analyzing the futures market sentiment could offer valuable insights. 

Source: CryptoQuant

The following chart illustrates the funding rates, representing periodic payments to long or short traders based on the difference between perpetual contract markets and spot prices. These funding rates reflect traders’ sentiments in the perpetual futures market, and the amounts are proportional to the number of contracts. 

Positive values signify that long-position traders dominate and are willing to pay funding to short traders, indicating a relatively bullish sentiment in the futures market. However, despite this positive sentiment, the price has yet to move upward, raising concerns. If this pattern persists, there might be a short-term market decline, as a long liquidation cascade could be on the horizon.

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