Bitcoin has recently been trading in a historically tight 60-day price range. This is what typically follows such periods of compressed volatility.
Both the price action and supply of Bitcoin are narrow within a narrow range
In the recent one post on X, analytics firm Glassnode discussed that BTC has not witnessed much edged price action recently. Below is a chart provided by an analyst firm that shows historical instances where the 60-day price range was narrower than the current one (in terms of percentage fluctuation).
Looks like there haven't been many instances of a tighter price range in history | Source: Glassnode on X
The chart shows that there were only a few periods in which the price of a given asset within 60 days fluctuated between a narrower range than in the last two months. This highlights just how tense Bitcoin’s price action has been lately.
Interestingly, all cases with a more compressed price range led to particularly volatile periods for the asset in question. Therefore, it is possible that the last obsolete period will also end with a really edged fluctuation in the cryptocurrency price.
Narrow range volatility decompression has not always been bullish; However, the celebrated November 2019 crash that marked the bottom of this cycle’s bear market occurred after historically obsolete changes in the coin’s value.
The narrow price range isn’t the only indication that Bitcoin could be due for near-term volatility, as Glassnode noted that a significant percentage of BTC’s supply is concentrated around the current price level.
The data for the Realized Supply Density in the +15% to -15% price range | Source: Glassnode on X
The chart above shows data on “Realized Supply Density”, which is an on-chain metric that tells us the percentage of a given asset’s supply that has recently been purchased within a given range surrounding Bitcoin’s current value on the spot market.
In the chart, the analytics company has chosen a range of 15%, which means that the indicator displays the amount of supply that has recently moved within a range of +15% to -15% from the last price.
Realized supply density for this price range has historically followed an engaging pattern: a gradual escalate in its value corresponded to the “volatility build” phase for BTC, followed by a edged decline to the “volatility release” phase.
Recently, Bitcoin has been in the first phase in terms of this indicator. About 20% of the BTC supply is currently concentrated in the range of ±15%, which is a noteworthy value. “This creates the potential for increased market volatility as investor yields change,” notes Glassnode.
BTC price
At the time of writing, Bitcoin is trading at around $105,700, up over 5% in the last seven days.
Looks like the price of the coin has seen an uplift during the past day | Source: BTCUSDT on TradingView
Featured image from iStock.com, Glassnode.com, chart from TradingView.com
