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Bitcoin (BTC) Volatility and Volume at Yearly Lows, Ready for Breakout?

At only 1.49%, Bitcoin’s volatility index is at the lowest it’s been this year. The volatility index of Bitcoin peaked in late March during the initial wave of the coronavirus pandemic when it reached a high of 11%. That was the highest it’s been since January 2014, spurred on by a massive global stock market selloff that took the price of BTC/USD down to almost $3,000 per coin.

Volume has also been steadily decreasing since March this year, with many traders and investors holding their Bitcoin and other digital assets off-chain in cold wallets. This is believed to be in preparation for an expected surge following the third Bitcoin halvening event that occurred in May when the block reward for mining was halved for the third time since Bitcoin’s creation.

Bitcoin’s trading volume peaked at 481,000 BTC on March 13th this year and has steadily tapered off since then to around current levels at 41,000. On July 11th this past weekend it reached a yearly low of 21,600 according to metrics from Bitcoinity.org.

Is a breakout imminent?

With Bitcoin trading in a tightening range between $9,200 and $9,000 over the past three weeks, many weary traders are hoping for some movement soon. However, exactly which way that movement will be is heavily contested.

Some analysts believe there is a strong likelihood of rejection down to previous support at $6,400 if Bitcoin doesn’t make a strong break above $9,300 in the coming days. After losing the $9,300 support level earlier this month, BTC has struggled to break back above this point, with several small rejections.

Looking at the enclosing wedge pattern that has been forming over the past month, we see a breakpoint around July 20th where BTC needs to make a decisive decision either up or down. Of course, it could easily break in either direction before this point if volume and volatility pick up, so traders will need to keep a close eye.

$20,000 within the next year?

Despite the possibility of a further downside, historical movements and market sentiment still predict that BTC/USD will break new highs above $20,000 by the end of 2021.

A recent Twitter poll from popular Crypto Twitter voice PlanB reiterates the positive sentiment online. The poll results show that almost 70% of the 13,339 people who voted believe BTC will break $20,000 in the next 12 to 18 months. Only 16.6% believe it won’t and 13.8% are unsure.

In another poll from popular Bitcoin detractor Peter Schiff, the famous economist asks how long it will take Bitcoin ‘hodlers’ to sell their investment – considering that BTC/USD has struggled to break $10k for months now. Out of the 28,168 votes, 57.5% replied “I’m taking it to my grave” with only 15% claiming they would sell in the next year.

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