- Raoul Pal, former Goldman Sachs executive, notes that Bitcoin’s 30-day historical volatility dropping below 20 is a harbinger of significant price gains, based on historical data.
- Pal is also closely monitoring Bollinger Bands, another volatility indicator, which shows historically low readings, mirroring conditions that led to massive rallies in the past.
As cryptocurrencies continue to evolve, discerning the markers for significant price shifts is akin to an art form steeped in data analytics. Raoul Pal, a macro analyst and former Goldman Sachs executive, has identified one such ‘Golden Indicator’ that suggests a possible bull run for Bitcoin (BTC). According to Pal, Bitcoin’s 30-day historical volatility has recently dipped below the key threshold of 20 for the first time since the start of this year. Historically, such an event has been a precursor to substantial rallies.
A Signal Worth Its Weight in Gold
Delving deeper, Pal outlines that this sub-20 level of 30-day historical volatility has set the stage for momentous price hikes in the past. Data reveals that whenever Bitcoin has hit this particular volatility level, what followed were significant increases in its valuation. For instance:
- April 2016 saw an 83% increase in two months
- October 2016 recorded an 85% uptick in the same time frame
- March 2019 witnessed a staggering 214% rise in three months
- July 2020 led to a 102% spike within four months
- January 2023 resulted in an 85% gain over three months
Moreover, Pal is paying close attention to another volatility metric, the Bollinger Bands, which are “currently the tightest on record.” He noted that there’s been only one other instance where the Bollinger Bands reading dipped below 25, and that was in April 2016. Back then, Bitcoin went on to rally a mind-boggling 44x into its 2017 high.
As of this writing, Bitcoin is trading at approximately $26,127. This confluence of low volatility indicators serves as a compelling signal, fortified by historical precedents, that Bitcoin might be on the brink of another monumental run.
Moving on to Ethereum (ETH), Pal observes that the leading smart contract platform is continuing to trade within a bullish continuation pattern, despite market-wide corrections recently. This adds another layer to the existing bullish narrative surrounding cryptocurrencies. Pal mentioned that Ethereum, currently trading at $1,636,
“seems to be forming a large bull flag pattern.”
Pal’s scrutiny of these critical markers has wide-reaching implications, not just for Bitcoin but potentially for the broader cryptocurrency ecosystem, emphasizing the utility of rigorous data analytics in predicting future trends.