Dec. 12, 2024

CoinDesk 20 Index: 3,913.33  +5.37%
Bitcoin (BTC): $100,727.47  +2.46%
Ether (ETH): $3,919.42  +5.23%
S&P 500: 6,084.19  +0.82%
Gold: $2,710.82  -0.37%
Nikkei 225: 39,849.14  1.21%

Bitcoin rose as high as $101,840 before pulling back to hold above the $100,000 mark. The crypto market is looking to maintain the bullish momentum ignited by Wednesday's U.S. CPI report, which matched estimates and cleared the path for another Federal Reserve rate cut next week. Ether is eyeing another return to $4,000, trading above $3,900, higher by over 5% in the last 24 hours. The CoinDesk 20 Index, a measure of the broader digital asset market, rose more than 5%, thanks to some double-digit gains in the altcoin market from ADA and LINK.

Bitcoin has rallied more than $30,000 since Donald Trump won the U.S. election in November, which coincided with many coins leaving exchanges, but primarily BTC leaving in large chunks. Glassnode data shows that transactions worth more than $10 million of bitcoin were removed from exchanges at a rapid rate, a sign of aggressive buying at an institutional level. Many of these transactions appear to be on Coinbase. As of yesterday, almost 12,500 BTC ($1.3 billion) left exchanges, with roughly half leaving Coinbase, according to Glassnode data. Since the U.S. election, Glassnode data show that roughly 200,000 BTC have left exchanges, which leaves roughly 2.8 million BTC on exchanges, the lowest amount in the past seven years.

Shares of bitcoin miner Hut 8 jumped as much as 18% in pre-market tradingamid social media speculation that it is building a data center with Facebook owner Meta Platforms. The shares climbed to around $31 as of 12:30 UTC. The CoinShares Valkyrie Bitcoin Miners ETF, which offers broad exposure to the BTC mining sector, rose about 3%. Neither firm has announced such a partnership as yet. Hut 8 is building a data center in West Feliciana Parish, La. at an initial cost of $12 billion, local media has reported. Earlier this month, Meta said it was planning to build a $10 billion AI data center in Richland Parish, La., Reuters reported.

A key technical indicator that presaged bitcoin's November price surge is positioned precisely as it was then, signaling a potential volatility explosion ahead.

That indicator is the Bollinger bandwidth, a tool used to gauge impending changes in market jumpiness. For bitcoin, the bandwidth has narrowed to less than 10%, a level not seen since Nov. 4, the day before the U.S. elections. The largest cryptocurrency subsequently surged to $100,000 from $70,000 in four weeks.

Volatility is typically mean-reverting, and historical data shows that when the daily bandwidth drops below 10%, it often leads to upturns followed by increased turbulence. It's important to note that volatility is price-agnostic, meaning it can manifest in either direction. For example, after the bandwidth dipped below 10% in early June, BTC prices dropped to $54,000 from $69,000 in three weeks.

Seasoned traders wait for the market to confirm a direction by topping either of the two bands. A move above the upper band typically signals a bullish volatility explosion on the horizon, a dip below the lower band suggests the opposite.

- Omkar Godbole