Bitcoin (BTC) is facing significant volatility as BTC price data is boiling.
Research from the Blockchain analytics platform CryptoQuant on December 6 shows that oscillatory behavior within a range will continue to pose challenges for Bitcoin speculators.
Analysis: Bitcoin Faces Volatility Risk Towards the End of 2024
Bitcoin reached a new all-time high near $104,000 this week before witnessing a rapid decline of over 10%.
With nearly $1 billion in liquidations within 24 hours, traders received a classic reminder of the crypto market's fierce volatility.
However, CryptoQuant currently has a different short-term view — BTC price action is becoming boring.
"The 14-day Choppiness Index is in the first zone, indicating consolidation adjustments," contributor Percival wrote in his Quicktake blog post.
Percival used the Choppiness Index (CI) to illustrate that BTC/USD is now entering a cooling-off phase after its rapid volatility.
CI uses a scale from 0-100, with higher values indicating "choppy" market conditions. Conversely, a lower value indicates a trending market - both up and down. Crossing above 60 from below or below 30 from above represents notable events for traders looking for a transition from choppiness to trending and vice versa.
According to data from TinTucBitcoin and TradingView, the daily CI measured 56.7 points at the time of writing on December 7, after reaching its highest level since mid-August.
"One thing to note is the time factor of consolidation, in the 2020/2021 cycles there were 20 days of retracement and in the consolidation phase since March, the average decline is around 20 days," Percival continued.
""The longer the consolidation, the stronger the subsequent uptrend.""
BTC/USD daily chart with Choppiness Index. Source: TinTucBitcoin/TradingView
New BTC Price Consolidation Expected at $110,000
While a longer consolidation period could lead to a stronger trend reversal, in the short term, Bitcoin speculators may see progress in price discovery rather slowly.
Considering potential BTC price targets when this occurs, Percival used both market sentiment and the feasibility of speculators as a guide.
Specifically, Short-Term Holders (STHs) — entities holding coins for a maximum of 155 days — will see profit targets at $110,000 and $120,000. These levels roughly correspond to standard deviations on a Realized Capital Index measure.
"When looking at the STH Realized Capital, we can mark strong resistance levels that may be encountered, the first one will be $110K (+1.5 standard deviations), a significant profit area for STHs," the post concluded.
"As traders connect with psychological numbers, $120K has very strong psychological and emotional weight, and is a value within +2 standard deviations, making this level a deeper consolidation area."
Bitcoin STH Realized Capital data (screenshot). Source: CryptoQuant
