Bitcoin may see major price volatility at the start of December — Here’s why


The price of Bitcoin (BTC) faces two crucial events on Dec. 1 right after the weekly and monthly candles close. The upcoming weekly candle close is particularly noteworthy because it could mark the first red weekly candle since late September.

The monthly candle will be significant since it would mark the highest close in Bitcoin’s history if the price remains over $13,791.

Bitcoin realized volatility. Source: Cointelegraph Markets, Digital Assets Data

There are three key factors that could cause the volatility of Bitcoin to spike upon the weekly and monthly candle close. The factors are general uncertainty around the BTC price, record-high futures trading activity and open interest, as well as the overextended weekly chart.

Meanwhile, traders have turned cautious anticipating a pullback in the near term despite the rebound in price from around $16,500 on Nov. 28.

There are two key trends that could be fueling the recovery of BTC. First, Guggenheim Investments, a global asset management firm with over $233 billion in assets under management, secured the right to invest $500 million in the Grayscale Bitcoin Trust. 

In the U.S., where a Bitcoin exchange-traded fund (ETF) does not exist, the Grayscale Bitcoin Trust is the first point of entry for most institutional investors. Deribit reported that the news triggered significant buying activity in the options market. The firm said:

“Reports of Behemoth Guggenheim Macro Opps fund seeking to designate $500mn, promulgated over the weekend, caught shorts +TA pullback allocators by surprise as BTC bounced 2k from lows. The quiet wknd options market was ignited. Dec Calls bought, funded by Puts; hedges unwound.”

Second, high-net-worth investors and whales might be buying the dip in anticipation of Monday. In recent weeks, as quantitative traders pointed out, most of the buyer demand came from the U.S.

Some speculate that the demand is coming from Time-weighted Average Price (TWAP) algorithms, typically used by institutions and funds. Since TWAP algorithms would get activated again on Monday, this could add to the buyer demand for BTC.

Traders are generally uncertain about BTC price direction

There is a high degree of uncertainty in the cryptocurrency market at the moment as traders are divided on where the price will go next.