It's no secret that bitcoin's price has seen a stunning descent this year amid ongoing regulatory scrutiny, the birth of its futures market and exchange hackings.
Less clear to cryptocurrency traders, however, is what to make of the cornerstone cryptocurrency's realized volatility.
Bitcoin's rolling 30-day annualized volatility has sunk to around 61 percent, up modestly from its low of 50 percent earlier this month, according to an analysis from Pension Partners. Still, this volatility pales in comparison to the annualized volatility seen last year, north of 150 percent.
Ultimately, after its volatility has become this depressed and the cryptocurrency has lost as much as 70 percent from its December peak, I believe the selling has become exhausted, and a bottoming process can begin.
Bitcoin topped out in the midst of the futures contract launches; this was a big step in the asset's maturation. There was tremendous speculation, and a sort of fear-of-missing-out trade sent prices skyrocketing too high, too quickly. The sell-off since then has wiped out most, if not all, of the over-enthusiasm.
I like to say that a bottom is a process, not a price. Now that the price and volatility have come back down to Earth, this bottoming process can begin. I see significant upside from here in the long-term.
As for the near term, a bottom would occur more quickly and more constructively if the recent low of $6,000 per coin holds. However, the 100-week moving average is down near $4,550, so traders will be watching that level.
To the upside, I have consistently said $10,000 is a crucial line in the sand, even advising to sell against it. Meanwhile, the six-month downtrend remains intact until a close above $11,300, and the near-term downtrend remains intact until a close above $8,500. Its price Tuesday morning as hovering about $6,700, according to Coindesk.