Bitcoin (BTC): Volatility at an all-time low, a sign of things to come?

Volatility, an emblematic feature of Bitcoin, seems to be experiencing unusual days. The cryptoasset so well known for its erratic movements is currently displaying lower volatility than even the S&P 500, technology stocks and even gold. A surprising phenomenon, but what is it really hiding? Could it be the calm before the storm?

Historically low volatility

Volatility has always been a salient feature of Bitcoin. However, this volatility is not static, and fluctuates significantly. The current period, marked by historically low volatility, represents a decisive break with the patterns to which market players have become accustomed.

According to figures compiled by Bloomberg, Bitcoin has had eight consecutive trading sessions without a fluctuation of more than 1%, a sequence unseen since the beginning of the year. You have to go all the way back to October 2018 to find a similar period. This singular fact testifies to an evolution underway within the Bitcoin ecosystem.

#Bitcoin price volatility is nearing all-time low territory. Expecting a breakout soon. pic.twitter.com/NxMxQLhI7H

— sunnydecree (@sunnydecree) August 6, 2023

A new paradigm of stability!

The question on the minds of many observers is: why this sudden lull? In-depth analysis points to low trading activity on the markets.

July saw exceptionally low trading volumes for Bitcoin. K33 analyst Bendik Schei calls the current stability a “rare feat”. In his view, there’s no doubt that traders have momentarily deserted Bitcoin.

“The market is clearly in a phase of unprecedented stability, which usually acts as a massive pressure valve for volatility when it finally reignites.”

A similar observation was shared by The Block. According to their data, exchange platforms recorded a total cash transaction volume of $439 billion in May 2023, down almost 90% from $4.25 trillion two years ago.

Anticipating the inevitable: an upcoming eruption?

Despite this apparent stability, it’s crucial to bear in mind that Bitcoin is unpredictable. Periods of flat calm have often been preludes to sudden and substantial movements. While history has shown a correlation between declining volatility and major variations to come, the question remains: is this lull really the truce before the storm?

There may be various explanatory factors. A major announcement could easily trigger a new episode of volatility. Some point to the fading impact of BlackRock and the Bitcoin Spot ETF. Still others point to Bitcoin’s influence on the political scene, particularly in the US presidential race. The repercussions of these events could well affect the trajectory of Bitcoin.

#Bitcoin Expecting a lot of volatility around the end of August with all these ETF Decision deadlines in the first week of September.

My base case is still to see a delay but I'm ready to get surprised. pic.twitter.com/c6V54gvuo8

— Daan Crypto Trades (@DaanCrypto) August 6, 2023

In short, despite its reputation as a volatile asset, Bitcoin is currently experiencing a period of unusual stability. However, history reminds us that periods of calm can often give way to surprising turbulence. As investors carefully scrutinize upcoming events, the market is holding its breath, perhaps preparing for an eruption of volatility that could significantly redraw the crypto landscape.