Bitcoin price is well above $50,000, but there’s no denying that some of the momentum that the asset had to start the year has been lost. Volatility lowering also could suggest that the “hype run” might have “passed” for the time being.
But rather than see a sizable correction, Bitcoin price action could instead trade sideways a lot longer, which would be “healthy” before making a push to new record highs.
Disappearing Volatility Could Indicate Bitcoin Hype Has Died Down
The leading cryptocurrency by market cap has taken center stage in the world of finance during the ongoing pandemic. Unprecedented money printing to fund stimulus packages has made hyperinflation a reality but turned the world’s attention to Bitcoin.
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As the money supply expands exponentially, the cryptocurrency’s supply remains capped at only 21 million BTC. It has caused the price per coin to rocket from under $4,000 less than one year ago today, to as much as $58,000 at the current peak.
The uptrend has reignited interest in crypto as a whole, however, the “hype run” could be coming to an end, according to dwindling volatility.
Bitcoin volatility is disappearing as time goes on | Source: Arcane Research
Sideways Price Action Is “Healthy” Ahead Of New Bull Market Highs
The latest market report from Arcane Research calls attention to the fact that Bitcoin volatility – a trait the asset is notorious for – peaked in February along with the local high.
Since then, volatility has begun to wane, which the report claims “may indicate that the top of the ‘hype-driven Bitcoin run has passed.”
Peak crypto fever appears to have fizzled out after Elon Musk said the top coin seemed overvalued, which was right around when the BTC market cap surpassed $1 trillion for the first time.
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The dollar is also beginning to awaken, and the stock market is showing signs of weakness that could put crypto at downside risk. But the report says that the downside isn’t necessarily imminent. Instead, Arcane Research revisits 2017, before the final push to the bull market peak began.
“Bitcoin spent almost half of the bull run in 2017 in a sideways trend, which is only healthy before pushing to new highs,” the report reads.
Bitcoin could see a lot more sideways in the near future | Source: BTCUSD on TradingView.com
The chart above shows that there were at least three phases of sideways action before a move-up occurred. Thus far, Bitcoin has only completed one of these phases and is mid-way through another wave of consolidation.
If history repeats, the current sideways price action could go on a lot longer, and another similar trading range could be ahead before the final parabolic push.