The price of Bitcoin has recently seen a decline from its all-time high (ATH), suggesting a potential shift in market conditions. This decline, while it appears typical, may indicate underlying concerns about future volatility.
Historical indicators suggest that a volatility explosion may be on the horizon, prompting major holders to shift to a neutral stance.
Bitcoin is facing the calm before the storm
The DVOL index for Bitcoin, which tracks the asset's volatility, is at historically low levels. Only 2.6% of days have seen lower values, indicating significant complacency in the market. This suggests that investors are not hedging against potential declines, which could lead to significant price movements if unexpected events cause volatility.
The overall momentum of Bitcoin's macroeconomics shows a noticeable shift in investor behavior. The change in the net position of HODLers has slowed, indicating reduced activity from long-term holders (LTHs). Although LTHs began accumulating at the start of the month, this buying trend has halted, likely due to the prevailing uncertainty in the market.
Despite the lack of new buying activity, the absence of selling indicates a degree of optimism among holders. They seem to be waiting for a clearer market direction before taking their next step. This suggests that LTHs are cautious but expect that any rise in volatility may eventually lead to an increase in price, keeping their positions steady for now.
BTC price may maintain its support
Bitcoin's price has shown an upward trend throughout the month, but this momentum faltered in the last 24 hours, with BTC dropping to $117,305. This decline occurred as the price fell below the established upward trend line, indicating a shift in market sentiment.
If investors maintain their positions during the expected increase in volatility, Bitcoin could stabilize above $117,000. This would open the door for a potential push towards $120,000, turning it into support and allowing for further upward movement.
However, if investor sentiment turns pessimistic and selling increases in response to the volatility, Bitcoin could face a significant drop. In this case, the price may fall through the support level of $115,000, reaching a minimum of $112,526. This would wipe out the gains seen in August, negating the bullish outlook.
