Fundstrat Warns Bitcoin Could Swing 30% in Either Direction as Volatility Hits Record Lows

Fundstrat’s head of digital asset strategy, Sean Farrell, warned in a client note on August 17 that Bitcoin’s volatility is nearing a record low, a pattern that historically has preceded significant price movements. According to the note, past periods of similarly low volatility have seen a median absolute price move of about 30% over the following 60 days, with the direction of the move nearly evenly split—four cases ended higher and four ended lower.

What’s Driving the Low Volatility?

Bitcoin has been trading within a narrow range for weeks, a phenomenon that has frustrated traders and analysts alike. The low volatility comes amid a backdrop of mixed macroeconomic signals, including rising long-term real interest rates, which Farrell highlighted as a potential catalyst that could push $BTC out of its current range. Real interest rates, which adjust nominal yields for inflation, have been climbing, and higher real rates tend to put downward pressure on risk assets like Bitcoin.

Short Liquidations Fuel Recent Rebound

Farrell also noted that the recent rebound in Bitcoin’s price appears to be largely driven by short liquidations. Data from the note shows that Bitcoin perpetual futures open interest fell about 8% while the price rose after August 14, indicating that many short sellers were forced to cover their positions. However, Farrell cautioned that this pattern is not new. In June and early July, similar short-covering rallies temporarily pushed prices higher, but those gains were subsequently erased. He sees a similar scenario as the base case this time, suggesting that the current upward momentum may be short-lived unless broader market conditions shift.