While bitcoin (BTC) has lost almost 80% of its value from the hards, one should wonder about the evolution of market statistics. Despite the price drop, bitcoin volatility does not appear to be disrupted. This phenomenon is rare as some indicators currently confirm the fragile stabilization of bitcoin (BTC) at the $ 20,000 zone. In addition, while the market is in full swing, most portfolios seem to have the protection of key gateways. The study of bitcoin statistics allows us to make a detailed understanding of the phenomena that we know today and that we need to predict tomorrow.
A “normal” bitcoin (BTC) statistical crash?
A phenomenon rare enough to emphasize is related to the evolution of bitcoin volatility. In clear terms, bitcoin currently has variations ” normal “about its history. This observation necessarily raises questions about the long – term evolution of the market. The fact that bitcoin has not undergone major statistical changes despite recent events may be a signal of a shift from the market patterns seen in bitcoins (BTC) past..
Stagnation of bitcoin volatility…
The chart below calculates the annual volatility of bitcoin (BTC). This volatility is calculated from the changes of the last 100 days according to the normal financial methodology. We note that this volatility tends to stabilize by around 60% since the beginning of 2022. This shows a clear statistical phenomenon: recent bitcoin price movement is not much different from past movements.
In addition, bitcoin volatility is generally observed to increase during the phases of bitcoin price rise. Conversely, falling bitcoin prices often lead to lower volatility. In other words, that means Bitcoin swings hugely during highs in the market. However, volatility did not decrease with the sharp fall in the price of bitcoin in 2022. So is this an anxious thing in the medium and long term?
Reduced long-term market attractiveness?
The fact that bitcoin does not fall slowly or significantly can lead to three future conclusions:
- First, the lack of volatility change may reduce the potential for a long-term rebound. In fact, we have seen an increase in volatility accompanying the rise in the price of bitcoin. Therefore, a future rebound in bitcoin without an increase in volatility would not generate a satisfactory bullish performance.
- Then, a lack of reduced volatility in the last step could be a source of risk. In fact, the lack of low volatility in bitcoin, despite its low levels, could also be interpreted as an additional downside risk.
- At the end, stagnant volatility would reduce the potential for downsides and upside down for bitcoin prices.
This analysis is confirmed by the annual variation of bitcoin. In fact, Bitcoin recorded bullish performances of up to + 1750% in 2017, against “only” + 750% in 2021. In addition, the bullish phase of 2021 was accompanied by a strong increase in the liquidity of the ranks. in 2017.
Restore $ 20,000 key support
The $ 20,000 threshold is even more important because it represents a major technical threshold, but also a threshold for protection of interests. Some statistical and technical indicators confirm the idea that the market should hold around $ 20,000. The question that now arises is whether we are really looking at a market reversal, at least in the short term.
Statistical signs of depletion on the decline?
Excessive asset variability can be used to measure cumulative change over the closing periods. In fact, most assets have what they call “Statistical growth limits “. That is to saygradually an asset is less likely to default if the n periods were also last. This method is very useful and clearly informs us of the investment risks associated with time.
The graph above shows the cumulative variations of the last 50 days on bitcoin. So we note that the indicator is still extremely focused between -50 and 50, then -100 and 100 for the ends. As of June 20, 2022, the indicator is -68. That means the cumulative bearish variations reach historical extremes, which mechanically increases the probability of price reversal. The last time this indicator was low was in February 2018 (-92.5), December 2018 (-64), and June 2021 (-51). Each of these signals was accompanied by a rebound in the price of bitcoin.
However, this analysis based on daily variations is essentially valid in the medium term. In the long run, the study of weekly cumulative variations allows the potential for a rebound to qualify. In fact, the cumulative weekly variations do not show us a clear upward signal. We would, therefore, above all be in the configuration of the next possible rebound, but the trend would continue for several months..
$ 20,000 and Great Advocacy !
Many institutions, starting with Microstrategy with its 130,000 bitcoins, entered the bitcoin market priced at around $ 20,000. Permanently below this threshold would result in solvency problems for many companies, causing the market to collapse. This portal shows so protection of strategic interests for multiple portfolios. In addition, the fall in the price of bitcoin poses profitability problems for some miners.
In our previous publication, we also highlighted the importance of the $ 20,000 to $ 22,250 zone. While bitcoin recently reached $ 17,500, it has quickly reached $ 21,500 recently. Such a short-term rebound indicates that bitcoin has reached strategic thresholds to protect interests. The continued breakout of the $ 20,000 threshold would cast doubt on the sustainability of the market.
Finally, it should be remembered that this fragile stabilization of bitcoin (BTC) is done in synchronization with the actions. The correlation with equities has recently reached a new high of over + 90%. This phenomenon is generally observed in the bitcoin low points (2018, 2020) and bitcoin decline generally shows a lower correlation with stocks.
2 trillion lost …
This value destruction is historic for cryptocurrencies. It represents nearly $ 2,000 billion in cryptocurrencies. However, the bond market should lose 4 to 5 times more value from the beginning of the year. Between the peak of the fall of 2021 and current levels of bitcoin, the cryptocurrency market lost the capitalized equivalent of $ 2 trillion. Now, the market capitalization of cryptocurrency does not exceed $ 850 billion. In the process, as often during market declines, Bitcoin regained market share. Bitcoin’s dominance fell from 39.5% of the market in January 2022 to almost 47.5% today (+8 ponc).
At the same time, between June 2021 and June 2022, Bitcoin fell just over 50%, a testament to this “normal movement”. However, the fall from the last peak is more than 70%. That means bitcoin is about to move big, with no increase in volatility so far. If we follow the logic of this volatility, that means bitcoin has more than two out of three chances of finishing between $ 7,500 and $ 32,300 in June 2023.
Completed
Ultimately, while searches for the word “bitcoin” have dropped by 60% since May 2021, the latter is largely neglected. However, the market crash is not statistically significant “unnatural “. In addition, we note with some surprise the stability of the volatility recorded on bitcoin. While this may mean the long – term potential of bitcoin, some players are reaffirming their interest in the $ 20,000. After a low of $ 17,500 on Saturday June 18 around 10 pm, the price of cryptocurrencies marks a bearish stop in synchronization with stocks.
Thus, while a statistical signal of variations is emerging in the short term, the market seems to be getting its emotions back. In terms of cycles and time, the market may regain some color by the end of summer. Also, it correlates with the cyclicality of the stock. However, the tensions over the markets should not disappear quickly. It should therefore be borne in mind that market strength is still on the downside, and that a battle of interests is now underway.
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Thomas Andrieu
Author of several books, economic and financial editor on various sites, over the years I have developed a real passion for the analysis and study of markets and the economy.
