What to know:
- Bitcoin price moved above $64,000 after buyers defended the key $63,300 support area.
- BTC implied volatility dropped into the lowest 2% of its historical distribution.
- Liquidity clusters near $64,700 and $62,200 now define Bitcoin’s next key price range.
Bitcoin price rose nearly 2% on Aug. 17 and moved back above $64,000 after buyers defended the $63,300 area. The rebound improved the near-term setup, but weak daily momentum and unusually low volatility still leave the next major move unresolved.
Analyst Michael van de Poppe said the reaction around $63,300 was important for a further advance. In an X post, he noted that Bitcoin tested the level and was quickly bought.
He said another revisit of that area would signal weakness. Instead, he expects the Bitcoin price to continue toward $65,000 if the current recovery holds.
Bitcoin Price Volatility Falls to Historic Levels
Rafael Schultze-Kraft, co-founder of Glassnode, pointed out an interesting configuration related to volatility. He said that the implied volatility of Bitcoin found itself at the 2nd percentile of its historical distribution.
Implied volatility measures how much price movement options traders expect in the future, but it does not indicate whether they expect prices to rise or fall.
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Schultze-Kraft emphasized that implied volatility still stands at about 1.5 times above the realized volatility in Bitcoin. Realized volatility is a measure of recent price movements.
Such a disparity proves that the premium of future volatility paid by options traders remains considerable, despite an extremely narrow recent trading range of Bitcoin.
A score representing the “volatility trap” of Glassnode reached 91 out of 100, marking the peak in more than three and a half years.
Moreover, Schultze-Kraft noted that low implied volatility is not always an indication of cheap options. The realized volatility declined even more, so the relative premium stays at a high level.
Past periods of severe volatility compression have often preceded sharp price swings. However, Glassnode data does not indicate whether the next move will be higher or lower.
Capital flows, macroeconomic policy, and new market catalysts could shape the next move. Current volatility data does not favor either a bullish or bearish direction.
Bitcoin Price Faces Liquidity on Both Sides
Since late July, Bitcoin has ranged between $62,000 and $65,000. There have been a few quick deviations from the range that have not led to a breakout.
According to CoinGlass’ weekly liquidation heatmap, there is a large number of leveraged positions both above and below the current Bitcoin price. The nearest strong overhead level is located at $64,000, whereas a bigger concentration can be found around $64,700.
The price movement through those areas can trigger a short squeeze, thus increasing demand for Bitcoin and taking its price towards $65,000.
On the other hand, the downside liquidity can be found at $62,700 and $62,200. A rejection at current levels can result in a move to those areas and liquidations of leveraged longs.
Those clusters represent the potential areas of increased market activity due to forced closure of positions. It should be noted that they do not confirm a potential breakout in either direction.
The liquidity heatmap highlights that the near-term liquidity range could be between $62,200 and $64,700. According to Glassnode’s volatility data, BTC volatility is compressed to date.
Meanwhile, the Bitcoin price remains caught between strengthening support and historically compressed volatility. Resistance near $64,700 and support around $62,200 define the key short-term boundaries. A decisive break on either side could shape the next major move.
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This article contains market analysis and price predictions. These are not guarantees. Crypto markets are volatile. Always DYOR. Not financial advice.
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