Sharp Bitcoin price move expected as volatility hangs at record lows and sellers are ‘exhausted’

Bitcoin’s (BTC) lack of volatility has been the dominant discussion point among traders for the past two weeks and the current sideways trading within the $18,000 to $25,000 range has been in effect for 126 days. A majority of traders agree that a significant price move is imminent, but exactly what are they basing this thesis on? 

Let’s take a look at three data points that predict a spike in Bitcoin volatility.

Muted volatility and seller exhaustion

According to Glassnode research, the “Bitcoin market is primed for volatility,” with on- and off-chain data flashing multiple signals. The researchers note that 1-week realized volatility has fallen to 28%, a level that is typically followed by a sharp price move.

Exploration of Bitcoin’s aSOPR, a metric which “measures an average realized profit/loss multiple for spent coins on any given day” shows:

“A large divergence is currently forming between price action, and the aSOPR metric. As prices trade sideways or decline, the magnitude of losses that being locked in are diminishing, indicating an exhaustion of sellers within the current price range.”

In addition to the divergence between price and the adjusted SOPR, short term Bitcoin holders are approaching their breakeven level as the short term holder SOPR approaches 1.0.

This is significant because a reading of 1.0 during a bear market has historically functioned as a level of resistance and there is a tendency for traders to exit their positions near breakeven.

If the aSPOR were to crest above 1.0 and turn the level to support, it could be an early sign of a fledgling trend change within the market.

Trading indicators are also at pivot points

Multiple technical analysis indicators are also flashing a signal that a strong directional move is in the cards, a point noted by independent market analyst Big Smokey.

According to Big Smokey:

Bitcoin price range, SuperGuppy and Bollinger Bands are getting real tight. ETH looks the same. You know what that means. pic.twitter.com/e7s6ScG7jz

— Big Smokey (@big_smokey1) October 18, 2022

Crypto research firm Delphi Digital recently issued a similar perspective, citing “compression” within the Guppy Multiple Moving Average as a sign of “shorter-term momentum and the potential for a rally as this cohort attempts to flip the longer-term moving averages.”…