Over the last few days, the price of Bitcoin has lost its hold on the $30,000 level and was dragged back down to the $29,000 level. Naturally, this has had some effect on the market, dragging some other coins down with it. But metrics point to this drawdown being only a temporary setback for BTC. According to volatility, there are still some ways to go before the rally comes to an end.
Bitcoin Volatility Drops To January 2023 Levels
According to new data shared by on-chain analytics platform Santiment, Bitcoin’s volatility could point to a continuation of the bull rally. The digital asset’s volatility has been on a decline and has now returned to levels not seen since January 2023.
The majority of this decline in volatility can be seen after BTC first cleared the $25,000 resistance. As the price continued to rise, so did the volatility. The last time the volatility was this low was following the FTX collapse of 2022. It triggered a drought that saw the price of BTC decline sharply alongside its volatility. However, the price did pick up once the volatility hit 2023 lows at the start of the year.
Volatility returns to January 2023 levels | Source: Santiment
Since then, the volatility has been on what can be described as a rollercoaster trend, hitting higher highs before subsequently declining. In April, BTC’s surge above $30,000 saw the volatility decline rapidly, which could be good news for the cryptocurrency.
Why BTC Could Continue To Rally
Looking at the chart shared by Santiment, it is quite evident that the price of Bitcoin has often rallied when the BTC volatility has fallen this low. Going back to January, the chart shows that following the decline in volatility, BTC’s price promptly shot up.
The January rally was the start of what would be a very profitable Q1 for the crypto market. By the end of March, BTC and other coins had added around 50% to their value. Eventually, the pioneer cryptocurrency rallied to a 9-month high above $30,000.
If history were to repeat itself once more, then BTC could be seeing another rally right now. A rally from this point could see the digital asset beat the $35,000 resistance for the first time since May 2022, which would further solidify BTC’s entrance into another bull market.
At the time of writing, BTC is changing hands at a price of $30,400. The coin is up 3.18% on the 24-hour chart and is seeing 1.58% gains on the hourly chart.
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Author: Best Owie