Bitcoin’s Volatility Metric Hits Record Low

Amid Bitcoin’s (BTC) ongoing price revival, the asset is about to enter a phase of uncertainty as experts highlight what to expect.

According to CryptoQuant’s Axel Adler Jr. via X, Bitcoin’s Realized Volatility metric is at its lowest level as traders anticipate further movement. The Realized Volatility metric indicates how unstable an asset’s price is within a given period.

Hovering Around 7%

Per Adler’s X post, Bitcoin’s 1-week Realized Volatility hovers around 7%. Such low volatility has only been observed ten times in the last six years and indicates an exceptionally tight period of price consolidation for the cryptocurrency.

1-Week Bitcoin Realized Volatility. | Source: CryptoQuant

The implications of this low volatility are significant. Historically, when BTC’s price action has been so stagnant, it is frequently followed by a period of sharp price pumps. According to the expert, the most recent example of this pattern occurred before BTC reached its all-time high. Even though the current low volatility may indicate an impending sharp move, the direction of this move is uncertain.

Potential Bitcoin Market Movements

Given the historical context, the recent consolidation in BTC’s price could signal a significant market shift. However, recent activities involving the defunct exchange Mt. Gox have caused distortions in several on-chain metrics.

Axel posited that these movements have resulted in false signals across several metrics. One such metric is the Bitcoin Adjusted Spent Output Profit Ratio (aSOPR), which measures the net profit or loss experienced by investors across the network.

Chart Showing aSOPR Depiction of Profit and Loss. | Source: CryptoQuant

The movement of BTC from Mt. Gox wallets, which had been inactive for an extended period, has resulted in a rise in the aSOPR. This increase is due to the large amount of “realized” profit from these long-dormant assets, even though it does not reflect an actual profit-taking activity. As a result, Axel noted that this distortion does not reflect actual market sentiment and is not a sign of widespread investor profit-taking and capital inflow.