Bitcoin (BTC) has been building a bullish momentum since the start of the week, a move that could be the beginning of an end to a market lethargy that has lasted since mid-summer. Indeed, the historical volatility measure of Bitcoin last week broke its bear market support in place since the spring of 2021, the historical low of volatility is in sight for a strong rebound, it is the guarantee of a month of November 2022 which will be hyper impulsive.
Bitcoin Price Volatility Is Near All-Time Low Support
Bitcoin (BTC) price volatility reached this end of October a level very close to its historical lowwith a 7-day volatility that could fall below 1%.
This is an anomaly for an asset class that has the highest volatility characteristics in the stock market, now expect a very strong rebound in BTC volatility in November from the all-time low.
Concretely, what is the significance of a strong upcoming rebound in BTC volatility?
This announces at an early stage a price movement that will be very large this November, either the following alternative and without half measures :
- A market stall below the $19,000 support and a drop in the price range around $10,000/$14,000 ;
- A bullish resolution of the chartist compression that has been building since the summer and a bullish recovery towards $25,000/$28,000.
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The choice of direction will be established according to the major market correlations with the trend of the American dollar on Forex, market interest rates and that of the stock market.
Bitcoin price compared to its 7-day historical volatility measurement (bottom curve)
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Cross-asset market and seasonality factors could be in favor of a bullish rally in BTC
The starting point for the bullish impulse in the price of Bitcoin at the start of the week was given by the publication of a very negative number for the price of residential real estate in the United States.
While the price of real estate represents on average 30% of the calculation of the inflation rate in the United States, it gives the market hope for disinflation the next few months and the end of the rise in interest rates.
Such a fundamental pattern of disinflation and falling rates would be a source of bullish recovery for the total crypto market capitalization.
Technical analysis also suggests that the price of Bitcoin could deliver outperformance against the equity market over the next few months on Wall Street. Technical analysis applied to the BTC/S&P 500 ratio curve gives bullish signals, i.e. better relative behavior of BTC against US stocks.
Finally, the seasonality data remind us that November has been the best performing month for the price of Bitcoin for 13 yearswith an average performance of 55%.
Bitcoin/S&P500 weekly ratio, the relative ratio between BTC and the US stock market
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Vincent Ganne is a market strategist, technical analyst, trainer on the stock market and speaker on BFM Business. With a long experience in the field of analysis, he offers a global approach to financial markets. Both from a macroeconomic point of view and from a microeconomic point of view. Vincent Ganne also uses many aspects of chart analysis with the aim of forecasting trends in financial assets over the medium and long term.