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Kraken Intelligence, our team of in-house research experts, has released its Bitcoin Volatility Report for October 2020.
Each month, we take a deep dive into the fundamental and technical factors driving bitcoin’s price and volatility. Investors and traders should take note, as this edition has identified signs a new bull run may be about to begin.
- Grayscale reported record quarterly inflows of $1 billion, Square announced a $50 million bitcoin purchase and PayPal revealed it will allow users to buy and sell bitcoin, developments that provided no shortage of positive news for the market.
- Roughly 70,000 BTC left wallets holding over 100 BTC during the month, suggesting larger whales were engaged in profit-taking. However, demand from wallets with under 100 BTC offset these sales, as evidenced by bitcoin’s climb above $13,800.
- After setting an intra-month low of $10,384 on Oct. 2, bitcoin roared more than +28% to a 33-month high of $14,080 on Oct. 31 before finishing the month at $13,809.
- Annualized volatility was down 20 percentage points in October, with the metric falling to a 19-month low of 35.5%.
- Given bitcoin’s parabolic past, July’s multi-year pennant breakout and bitcoin’s latest move through $13,800 resistance, an ascent to $20,000 may follow.
What to Watch for Next:
- The Suppressed Pocket (The End) – Twelve times in the past, bitcoin’s annualized volatility bottomed between 15% and 30% before climbing 140% (on average) and returning +196% over 94 days. With 99 days passing since the trough was formed, and volatility on the cusp of falling back down into the “suppressed pocket,” an 8-year trend is on the verge of coming to an end.
- The Whales & The Goldfish – While whales (wallets with more than 100 BTC) took advantage of the October rally with some selling, the goldfish (wallets with less than 100 BTC) showed buying interest and helped sustain the rally. If demand holds strong in the $13,000 to $15,000 range, it could accelerate bitcoin’s appreciation into 2021.
- Wen Parabolic? – As of October 31, bitcoin had been trading above $10,000 for 97 consecutive days. This means the asset is entering rarified air, and that historical technical indicators may soon cease to matter as bitcoin sets new highs.