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Investing.com – The has been bouncing back since last night as the cryptocurrency rose from around $19,200 to peak at $19,700 overnight, a slight gain of 2.6%. But overall, as can easily be seen on the daily chart, the cryptocurrency’s trend remains consolidation, in a narrow range, and has been for several days.
In other words, Bitcoin volatility has fallen sharply in recent weeks, which could turn out to be a positive factor, according to a recent note from Bank of America (NYSE:).
Indeed, the bank wrote that bitcoin’s movements against other assets may indicate that investors consider it to be becoming a safe haven again, after a period when it was traded primarily as a risky asset.
The largest cryptocurrency has a 40-day correlation of around 0.50, down from around zero in mid-August. Although the correlations are higher with the , at 0.69, and the , at 0.72, they have stabilized and are below the record highs of a few months ago. BofA analysts see this as a sign that things could change, positively, for Bitcoin.
“A declining positive correlation with SPX/QQQ and a rapidly rising correlation with XAU indicate that investors may view bitcoin as a relative safe haven as macro uncertainty persists and the market has yet to reach its lowest level,” they wrote.
Note that BofA’s rating is consistent with recent comments from Mike Novogratz, who said Thursday that he sees bitcoin as “the canary in the coal mine” alongside gold and expects that it recovers before other cryptocurrencies.
Bitcoin technical background
From a graphical point of view, it should be noted that the fall in Bitcoin volatility comes after an important long-term graphical signal. Indeed, as seen on the daily chart below, Bitcoin crossed a long-term downtrend line in October, particularly significant since it stretched from the all-time high of BTC/ USD towards $69,000 in November 2021.
On the other hand, Bitcoin last week signed its second consecutive full week below the key $20,000 threshold which, coupled with the 100-day moving average currently near $20,900, forms a key resistance zone whose crossing would confirm the bullish reversal of Bitcoin’s background trend.
Then, the $23,000 and $25,000 areas will be the next bullish targets to aim for.