This Bitcoin Volatility Index Pattern Suggests A Short Squeeze May Be Near
28 Janvier 2022 - 08:00PM
NEWSBTC
The current Bitcoin volatility Index values suggest that a short
squeeze may be near, if past pattern continues to hold. Past
Bitcoin Volatility Index Pattern Suggests A Short Squeeze May
Happen Here As explained by an analyst in a CryptoQuant post, the
BTC volatility index has now reached values where a short squeeze
has happened in the past. The “volatility index” is an indicator
that shows how much the price of Bitcoin has fluctuated in a day
compared to its historical average. When the value of this metric
rises, it means the crypto’s price has recently seen higher
volatility as its price has deviated more from its average. On the
other hand, low values suggest Bitcoin has been relatively stable
lately as the price hasn’t seen any large movements. Volatility is
often high following a liquidation event. These “liquidation
squeezes” happen when the market is overleveraged, and so any big
swings in the price lead to mass liquidations of futures positions.
Related Reading | Bitcoin Bearish Signal: Binance Observes
Massive Inflow Of 10k BTC The price usually crashes during a long
liquidation squeeze due to a cascading effect by these
liquidations. On the contrary, the price may instead jump up during
a short squeeze. Now, here is a chart that shows the trend in the
Bitcoin volatility over the past six months: The index's value
seems to have risen and subsequently fallen recently | Source:
CryptoQuant As you can see in the above graph, the indicator’s
value shot up recently following a long squeeze, but has now come
back down. At the moment, the Bitcoin liquidation index seems to
have values of around 19.12. In the chart, the quant has
highlighted past portions that are relevant to this current trend.
It looks like shortly following such a formation, the price has
made a strong move up with a short squeeze. Related Reading
| ‘Bitcoin Rush’: Small-Time Solo Miners Strike Gold With Full
BTC Blocks The analyst thus thinks that the coin may follow this
pattern now as well, and its price may go back to $46k to $47k.
However, the quant believes that such a move will only be short
term relief, and Bitcoin will resume the downtrend soon after. BTC
Price At the time of writing, Bitcoin’s price floats around $36.2k,
down 5% in the last seven days. Over the past month, the crypto has
lost 28% in value. The below chart shows the trend in the price of
BTC over the last five days. BTC's price seems to have moved
sideways in the last few days | Source: BTCUSD on TradingView A few
days back, the price of Bitcoin jumped back to $38k, but the
recovery didn’t last long and the crypto fell down to $36k.
Featured image from Unsplash.com, charts from TradingView.com,
CryptoQuant.com
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