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When Will the Expected High Volatility in Bitcoin Arrive? Analysis Company Predicts BTC's Future
The crypto analysis firm Alphractal has published a new report summarizing key market indicators suggesting that Bitcoin may enter a consolidation phase in the coming weeks.
According to the findings, Bitcoin's annualized Sharpe Ratio is declining, which reflects past market cycles experiencing stagnation or correction periods.
The Sharpe Ratio, a metric used to evaluate risk-adjusted returns, has fallen to comparable levels seen in 2023, 2020, 2019, and 2016. With the ratio approaching zero, Alphractal analysts suggest that Bitcoin offers lower returns per unit of risk. Historically, similar trends have been followed by market stalls, indicating that a consolidation phase could be the most likely outcome.
Another important indicator marked by Alphractal is the annual percentage change of Bitcoin approaching the negative zone. Of the previous four instances when this occurred, three resulted in downward movements, while one had no significant effect.
The decline in Bitcoin's historical variation may indicate a period of lower volatility and reduced risk, making the market less attractive for short-term speculative trading. If Bitcoin follows the pattern observed in 2020, it may just be experiencing a routine consolidation phase. However, if the metrics continue to show a downward trend, the possibility of new lower prices may increase.
Alphractal CEO Joao Wedson, evaluating the current market outlook, stated that those expecting increased volatility in the near term may need to be patient.