The Last Time the World’s Premier Cryptocurrency Was This Calm, Prices Crashed

This is not investment advice. The author has no position in any of the stocks mentioned. has a disclosure and ethics policy.

Bitcoin is currently ensconced within a rare volatility compression zone, one that is likely to herald the much-anticipated cyclical bottom for the world’s premier cryptocurrency. However, before Bitcoin is able to resume its intrinsic upward trend, as dictated by the cryptocurrency’s perpetually decreasing supply dynamics, much more pain awaits bullish investors.

Bitcoin Historical Volatility Index (Daily)

As is evident from BitMEX’s Daily Historical Bitcoin Volatility Index (daily timeframe) above, the cryptocurrency was this calm just two other times this year, with both instances resulting in additional losses. To wit, the first such instance occurred back in October, just ahead of FTX’s spectacular collapse, which unleashed a fresh round of contagion across the crypto sphere. The second such instance occurred earlier in December, resulting in shallower losses for Bitcoin bulls.

Bitcoin Historical Volatility Index (Weekly)

When looking at the weekly timeframe, notice that the last time Bitcoin was this calm was back in March 2019. However, at that time, Bitcoin had then gone on to embark on a historic bull run. Clearly, the current volatility compression regime has historically proven to be a critical fulcrum point for the world’s premier cryptocurrency. In light of a plethora of evidence, we believe that Bitcoin’s next leg is likely to be lower.

Bitcoin is currently down around 57 percent relative to its latest death cross that occurred back in January 2022. As a refresher, a death cross occurs when the 50-day moving average falls below the 200-day moving average. In the past, Bitcoin has recorded losses of 42 percent, 55 percent, 65 percent, and 71 percent following a death cross. Since Bitcoin typically records an average bear market loss of 84.5 percent relative to its previous all-time highs – a level that corresponds to a price of around $11,000 – probability favors deeper losses ahead.

Moreover, Bitcoin has now broken down from a crucial RSI support zone, bolstering the thesis for sharper losses ahead.

As per the tabulation by Rekt Capital, Bitcoin bottomed in 2015 around 547 days before the cryptocurrency’s second halving event. In 2018, the world’s premier cryptocurrency bottomed 486 days prior to the third halving event. Notice the trend here: each successive bottom occurs around 60 days earlier than the previous one. If the same analog holds true this time around, Bitcoin should bottom out 425 days before the fourth halving event, currently scheduled for April/May 2024. This means that the cryptocurrency’s cyclical nadir should occur sometime in February 2023.

Meawhile, Tether is again experiencing volatility.

And, Bitcoin miners remain in a world of pain, justifying higher losses ahead.

Of course, H1 2023 is already being panned as a difficult period for the risky asset universe, given the prospects of a broad-based economic slowdown in the US or even an outright recession. However, China’s post-zero-COVID reopening offers a glimmer of hope for Bitcoin, oil, and other global commodities, especially when paired with expectations of a veritable volley of economic stimulus from the Asian giant.

Do you think further losses lie ahead for the world’s largest cryptocurrency by market capitalization? Let us know your thoughts in the comments section below.


This post has been edited with the correct timeframe for the next halving event.

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