Bitcoin could offer buying opportunity sub-$60K as market expectations for volatility remain high

• Following multiple days of sustained declines, Bitcoin’s realized volatility has risen sharply again.
• BTC could drop into the weekly imbalance between $52,985 and $59,005 before a move north.
• Bitcoin price recorded decent 20% pullbacks on multiple occasions during the bull market that started in 2023.

Bitcoin (BTC) price downtrend could be an opportunity in disguise for late bulls, providing a buying opportunity for traders looking to acquire BTC at discounted rates. This is ahead of the halving, out around 29 days from now, and expected to kick off the neck bull cycle.  

Also Read: BTC stuck under $65K ahead of FOMC

A possible buying opportunity for Bitcoin late bulls

Bitcoin price has recorded a steady series of lower lows and lower highs since the second week of March, amid ongoing profit-booking from retail traders. The dump drew BTC market value closer to the weekly imbalance (Fair Value Gap or FVG) that extends from $52,985 to $59,005. This FVG represents inefficiency in the market that needs to be filled. Therefore, price tends to pull back to it.

Amidst ongoing profit-booking, and effectively a decline in Bitcoin price, options traders’ toolkit Greeks.live highlights, “BTC realized profit has risen sharply again,” with all major term implied volatility indicators recording yearly highs.

A sharp rise in realized volatility means there is an increased number of Bitcoin holders who are able to sell their coins at a profit compared to when they acquired them. This could lead to:

• Profit-taking by long-term holders after seeing a significant rise in profits
• Elevated levels of bullishness and increased buying activity
• Increased volatility with more traders looking to take profits, causing fluctuations in price as buy and sell orders are executed

Another observation is that market expectations for volatility has also soared, with data pointing to significantly higher prices of short-term put options. This hints at a potential downside risk in the market as traders anticipate or hedge against a potential decline in price within a short time frame.

The data also indicates dissipating FOMO (fear of missing out) relative to what had been seen earlier in the year when traders flocked to be part of what the recently launched spot BTC exchange-traded funds (ETFs) would achieve for Bitcoin price.

With multiple theories suggesting an extended fall, history adds to the list as Bitcoin price has dropped by around 20% on several occasions during the bull market that started in 2023.

Bitcoin price outlook amid increased realized profitability

Bitcoin price has plunged 17% since topping out at $73,777 and then bottoming out at $60,775. Standing 3% below the average 20% pullback, the weekly imbalance (FVG) bears an effective pull on BTC price to fill the inefficiency.

With this, Bitcoin price could extend the fall 6% from current levels to tag the upper boundary of the FVG at $59,005. In a dire case where this level fails to hold as support, BTC could drop to the midline of this zone at $56,152. A break and close below this level could see BTC provide another buying opportunity around the $50,000 psychological level.

Notice the DXY, which is deviating away from the downside in an attempted flight or take-off, marking another warning sign for BTC holders. In hindsight, every time this overlay comparison spikes to the upside (bullish), the result is almost always bearish for Bitcoin.

The Relative Strength Index (RSI) has also crossed below 70, which some could interpret as a sell signal. Its directional bias is coupled with the red histogram of the Awesome Oscillator (AO) showing falling momentum.

BTC/USDT 3-day chart

On the other hand, if the bulls come in at current levels, Bitcoin price could push north, likely reclaiming the $69,000 threshold. A close above this level would welcome a continuation rally that could see BTC reclaim its $73,777 all-time high. In a highly bullish case, BTC price could extend the gains to record a higher peak.

Also Read: Bitcoin price correction is harsh, but late bulls could still have an opportunity to buy the dip