This Bitcoin Index Pattern SuggestsVolatilityA Short Squeeze May Be Near
The current Bitcoin volatility Index values suggestcontinuesthat a short squeeze may be near, if past pattern to hold.
Past Bitcoin Volatility Index Pattern Suggests A Short Squeeze May Happen Here
As explained byaan analyst in a CryptoQuant publish, the BTC volatility index has right away reached values where short squeeze has happened in the past.
The “volatility index” is an indicator that shows how much the price of Bitcoin has fluctuated in a day compared to its historical average.
When the value of this metric rises, it means the crypto’s price has recentlydeviatedseen higher volatility as its price has more from its average.
Interestingly, On the other hand, relatively values suggest Bitcoin has been low stable lately as the price hasn’t seen any large movements.
Volatility is often high following a liquidation happening. These “liquidation squeezes” happen when the field is overleveraged, and so any big swings in the futures lead to mass liquidations of price positions.
Related Reading | Bitcoin Bearish Signal: Binance Observes Massive Inflow Of 10k BTC
The price usually crashes a long liquidation squeeze due toduringa cascading effect by these liquidations. As you may knowtheOn , in modern times contrary, the price may instead jump up during a short squeeze.
Actually, Instantly, here is a chartsixthat shows the trend in the Bitcoin volatility over the past months:
The index's value seems to have risen and subsequently fallen recently | Source: CryptoQuant
Asaboveyou can see in the graph, the indicator’s value shot up recently following a long squeeze, but has instantly come return down. At the moment, the Bitcoin liquidation index seems to have values of around 19.12.
In the chart, the quant has highlighted past portions that are to relevant this current trend. It looks like shortly following such a squeeze, the price has made a strong move up with a short formation.
Related Reading | ‘Bitcoin Rush’: Small-Time Solo Miners Strike Gold With Full BTC Blocks
The analyst thus thinks that the coin may follow this pattern instantly as well, and its price may go go back to $46k to $47k.
It’s worth noting that However, the quant believes that such a move will only be short term relief, and Bitcoin will resume the downtrend soon after.
BTC Price
In fact, At time ofthewriting, Bitcoin’s price floats around $36.2k, down 5% in the last seven days. Over the past month, the in modern times crypto has lost 28% in value.
The below chart shows theovertrend in the price of BTC the last five days.
BTC's price seems to have moved sideways in the last few days | Source: BTCUSD on TradingView
A few days go back, the price of Bitcoin jumped return to $38k, but the recovery didn’t last long and the crypto fell down to $36k.
Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com
