Decentral Block Post

The price of Quant Network (QNT) eyes a sharp reversal after an impressive 450% rally in the past four months.

QNT's downside outlook takes cues from a flurry of technical and on-chain indicators, all suggesting that investors who backed its price rally have likely reached the point of exhaustion.

Here are three reasons why it could be happening.

Quant's daily active addresses drop

Interestingly, the period of QNT's massive uptrend coincided with similar upticks in its number of daily active addresses (DAA). This metric represents the number of unique addresses active on the network as a sender or receiver.

As of Oct. 17, the Quant Network's DAA reached an all-time high of 10,949, up from around 5,850 four months ago, data from Santiment shows. Its upsurge during the QNT price uptrend shows traders were net buyers.

Bitcoin (BTC) has been trying to break above the $20,500 resistance for the past 35 days, with the latest failed attempt on Oct. 6. Meanwhile, bears have displayed strength on four different occasions after BTC tested levels below $18,500 during that period.

Investors are still unsure whether $18,200 was really the bottom because the support level weakens each time it is tested. That is why it’s important for bulls to keep the momentum during this week’s $510 million options expiry.

The Oct. 21 options expiry is especially relevant because Bitcoin bears can profit $80 million by suppressing BTC below $19,000.

Bears placed their bets at $19,000 and lower

The open interest for the Oct. 21 options expiry is $510 million, but the actual figure will be lower since bears were overly-optimistic. These traders completely missed the mark placing bearish bets at $17,500 and lower after BTC dumped below $19,000 on Oct. 13.

The 0.77 call-to-put ratio shows the dominance of the $290 million put (sell) open interest against the $220 million call (buy) options. Nevertheless, as Bitcoin stands near $19,000, most bearish bets will likely become worthless.

Bitcoin’s (BTC) lack of volatility has been the dominant discussion point among traders for the past two weeks and the current sideways trading within the $18,000 to $25,000 range has been in effect for 126 days. A majority of traders agree that a significant price move is imminent, but exactly what are they basing this thesis on? 

Let’s take a look at three data points that predict a spike in Bitcoin volatility.

Muted volatility and seller exhaustion

According to Glassnode research, the “Bitcoin market is primed for volatility,” with on- and off-chain data flashing multiple signals. The researchers note that 1-week realized volatility has fallen to 28%, a level that is typically followed by a sharp price move.

Exploration of Bitcoin’s aSOPR, a metric which “measures an average realized profit/loss multiple for spent coins on any given day” shows:

“A large divergence is currently forming between price action, and the aSOPR metric. As prices trade sideways or decline, the magnitude of losses that being locked in are diminishing, indicating an exhaustion of sellers within the current price range.”