After Bitcoin has experienced bouts of suppressed volatility it has averaged 200% returns over the following months
Before the recent surge to $12k, bitcoin had been seeing remarkably stable price action.
It went sideways for months and months, dropping the annualized volatility numbers down into a very interesting zone.
A zone between 30% and 15% annualized volatility.
Going back to 2012, bitcoin had only dropped below 30% annualized volatility 12 other times.
In almost every instance, volatility then exploded higher shortly after, and so did the price.
Check it out:
(Source:
)https://twitter.com/krakenfx/status/1293232838746218498/photo/1
- krakenfx
As you can see, when volatility gets down into that range, it doesn't stay there for long and not only does it leave that range shortly after, but often in an explosive manner.
What to expect...
History rarely repeats exactly, but it sure does rhyme a lot.
And if we look at the average outcomes from these scenarios, we can get an idea of what "might" happen this time around.
Based on the data, once bitcoin has entered this compressed volatility pocket, it tends to see a spike in volatility that peaks around 140% and a gain in price of around 196%.
And this all happens within the next 3 months...
Check out the data:
(Source:
)https://twitter.com/krakenfx/status/1293233164631060480/photo/1
- krakenfx
Given the fact that we entered this range back on July 24th and at a price of $9,500, repeating those averages would see bitcoin hitting $28k by the end of October.
That is a little under 3x the current price in a little over two months.
While that may sound a little crazy, remember that bitcoin makes all it's gains for the year during it's ten biggest "up days" of the year.
Get a couple of those thrown in the mix here and it could happen, though my personal opinion is slightly more conservative as I think bitcoin will peak around $20k for the highs this year.
Stay informed my friends.
-Doc