Bitcoin price volatility predicts market peaks and crashes, study finds.
A new model was created to study how price changes and volatility are related. The model shows that volatility is lowest just before prices reach their highest point. When prices change quickly and supply/demand are imbalanced, volatility is highest. The model was tested with Bitcoin's price bubble and collapse in 2018. The study suggests that high and low volatility can predict when prices will peak or bottom out. The model can be used for other assets beyond just stock returns.