Fundstrat said rising long-term real yields could eventually help break Bitcoin out of its unusually quiet trading range, while Tom Lee noted easing oil prices as a backdrop for risk assets.
- Fundstrat noted Bitcoin’s 30-day volatility is at historic lows, a setup that has historically preceded 30% moves over the next two months.
- Head of Online Assets Strategy said the median 60-day move in prior low-volatility periods was just over 30%, although the signal does not give a clear direction
- Bitcoin jumped more than 2% on Monday, and Fundstrat said much of the rally was driven by traders unwinding bearish positions, not the start of a sustained uptrend.
Bitcoin (BTC) may have been quiet over the past few weeks, but that calm could be setting up the stage for a much bigger move. According to Fundstrat, the cryptocurrency’s 30-day volatility sits near historic lows, which is a setup that has historically been followed by a 30% rise over the next two months.
Bitcoin’s price moves over the past 30 days have been among the smallest on record, Fundstrat’s Head of Digital Asset Strategy Sean Farrell reportedly said in a Monday note to CNBC, adding that much bigger moves have historically followed such calm stretches.
"The typical magnitude of historical moves is notable. Looking across prior observations, the median absolute move over the subsequent 60 days has been roughly 30%," Farrell said.
But the historical signal shows no clear directional bias. For the eight episodes FundStrat previously identified, the median absolute move over the next 60 days was just over 30%, with half higher and half lower.
Monday's Bounce Driven By Short Covering
Bitcoin rallied more than 2% on Monday after lagging other cryptocurrencies in recent sessions, though it remained down nearly 27% year to date, according to Fundstrat.
Much of the advance came from traders closing bearish positions, Farrell said, with coin-denominated open interest in perpetual futures down around 8% as prices surged, showing traders unwound sizable bearish exposure.
He warned that the bounce should not be mistaken for the beginning of a long rally. Similar cycles of short covering in early June and early July initially lifted prices before the gains eventually faded, although Farrell called the latest price action constructive.
The Next Catalyst: Real Yields
The bond market could trigger Bitcoin to break out of its unusually calm trading range, according to Farrell. He said rising long-term real yields were a risk to cryptocurrencies and other risk assets, noting that persistently higher yields could eventually end Bitcoin’s low-volatility spell.
Fundstrat co-founder Tom Lee, speaking separately on CNBC on Monday, said the 10-year yield range has stayed unusually tight and pointed to easing oil prices as a supportive factor for the broader market. A stable 10-year yield range could provide a supportive backdrop for Bitcoin by reducing pressure from rising borrowing costs and financial conditions, particularly if oil prices continue to ease.
Bitcoin Sentiment Remains Bearish
Bitcoin’s price was trading up over 1% during the past 24 hours. On Stocktwits, the retail sentiment around BTC remained in the ‘bearish’ zone, while chatter around it stayed at ‘normal’ levels over the past day.
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