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Breaking News: Major Win For Memecoins: SEC Affirms They Typically Do Not Qualify As Securities

This Bitcoin Volatility Index Pattern Suggests A Short Squeeze May Be Near

Keshav Verma
Keshav Verma
3 years ago
3 mins read

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The current Bitcoin volatility Index values suggest that a short squeeze may be near, if past pattern continues to hold.

Past Bitcoin Volatility Index Pattern Suggests A Short Squeeze May Happen Here

As explained by an analyst in a CryptoQuant post, the BTC volatility index has now reached values where a short squeeze has happened in the past.

The “volatility index” is an indicator that shows how much the price of Bitcoin has fluctuated in a day compared to its historical average.

When the value of this metric rises, it means the crypto’s price has recently seen higher volatility as its price has deviated more from its average.

On the other hand, low values suggest Bitcoin has been relatively stable lately as the price hasn’t seen any large movements.

Volatility is often high following a liquidation event. These “liquidation squeezes” happen when the market is overleveraged, and so any big swings in the price lead to mass liquidations of futures positions.

Related Reading | Bitcoin Bearish Signal: Binance Observes Massive Inflow Of 10k BTC

The price usually crashes during a long liquidation squeeze due to a cascading effect by these liquidations. On the contrary, the price may instead jump up during a short squeeze.

Now, here is a chart that shows the trend in the Bitcoin volatility over the past six months:

Bitcoin Volatility Index

The index's value seems to have risen and subsequently fallen recently | Source: CryptoQuant

As you can see in the above graph, the indicator’s value shot up recently following a long squeeze, but has now come back down. At the moment, the Bitcoin liquidation index seems to have values of around 19.12.

In the chart, the quant has highlighted past portions that are relevant to this current trend. It looks like shortly following such a formation, the price has made a strong move up with a short squeeze.

Related Reading | ‘Bitcoin Rush’: Small-Time Solo Miners Strike Gold With Full BTC Blocks

The analyst thus thinks that the coin may follow this pattern now as well, and its price may go back to $46k to $47k.

However, the quant believes that such a move will only be short term relief, and Bitcoin will resume the downtrend soon after.

BTC Price

At the time of writing, Bitcoin’s price floats around $36.2k, down 5% in the last seven days. Over the past month, the crypto has lost 28% in value.

The below chart shows the trend in the price of BTC over the last five days.

Bitcoin Price Chart

BTC's price seems to have moved sideways in the last few days | Source: BTCUSD on TradingView

A few days back, the price of Bitcoin jumped back to $38k, but the recovery didn’t last long and the crypto fell down to $36k.

Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com
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Keshav Verma
Keshav Verma

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

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Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

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Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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Reason to trust

Strict editorial policy that focuses on accuracy, relevance, and impartiality
Created by industry experts and meticulously reviewed
The highest standards in reporting and publishing
How Our News is Made

Strict editorial policy that focuses on accuracy, relevance, and impartiality

Ad discliamer

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