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Bitcoin’s Implied Volatility Craters after Bears Fire “Warning Shot”

Cole Petersen

Cole Petersen | Apr 27, 2020 | 23:00

Bitcoin

Bitcoin’s Implied Volatility Craters after Bears Fire “Warning Shot”

Cole Petersen

Cole Petersen | Apr 27, 2020 | 23:00


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  • Bitcoin’s implied volatility has cratered in recent times, plummeting back to its pre-crash levels
  • This comes as the cryptocurrency continues extending its intense uptrend as bulls attempt to propel BTC back up towards the $8,000 region
  • Bears have firmly established the upper-$7,000 region as a strong resistance region, and analysts don’t expect it to be surmounted anytime soon

Bitcoin has continued extending its recent uptrend despite facing multiple strong rejections at $7,800 yesterday.

One trend that could suggest another large movement is imminent is that the crypto’s implied volatility has dived to its pre-crash levels.

Analysts are cautious about the cryptocurrency’s current technical strength, as bears recently fired a “warning shot” showing that they may post an ardent defense of the resistance within the upper-$7,000 region.

Bitcoin’s Volatility Continues Cratering Despite Uptrend

Bitcoin is currently trading up marginally at its current price of $7,730, just a hair below the price level that has sparked multiple major rejections throughout the past several days.

It is important to keep in mind that BTC’s price action in the time following its latest uptrend has marked a bout of consolidation.

This comes close on the heels of the cryptocurrency’s steady uptrend seen in the time following its capitulatory decline to lows of $3,800 in mid-March, with the price action following this plunge pointing to some underlying strength amongst bulls.

One byproduct of this steady uptrend has been declining volatility.

According to data from research platform Skew, Bitcoin’s implied volatility has now reached its pre-selloff levels.

“Six weeks later, bitcoin implied vol is nearly back to its pre sell-off level,” they noted.

Bitcoin BTC

Image Courtesy of Skew

While looking at the above chart, it does appear that sharp declines seen by the crypto’s implied volatility are short-lived, meaning a big movement could be imminent.

BTC Bears Fire a “Warning Shot” as Bulls Set Their Sights on $8,000 

This next bout of sharp volatility may not favor bulls, however, as bears have established the upper-$7,000 region as a heavy resistance zone.

One popular analyst spoke about this in a recent tweet, explaining that BTC’s recent series of rejections have marked a “warning shot” from bears.

“Think the bears just fired the first warning shot where they technically should be. Can’t tell if it was to clear out liquidity or not but the previous swing high was run with a strong rejection. However no follow through yet,” he explained.

Image Courtesy of Pentoshi

How Bitcoin trades in the near-term could be critical for determining which direction the crypto’s next bout of volatility leads it to trend in.

Featured image from Unsplash.

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