Bitcoin (BTC) price surpassed $17,000 over the weekend. However, his first 10 days of 2023 are trading relatively flat with low volatility, much like a normal bear market.
BTC’s stability is reflected in the calmness in the derivatives market, fueled by lower trading activity. According to Arcane Research, this indicates that speculative demand for the largest cryptocurrency by market capitalization has declined. report.
BTC’s 30-day volatility has dropped to June 2020 levels, according to the report. While BTC’s price has remained relatively flat, 30-day volatility levels have reached the lowest levels seen in 2013, 2015, 2016, 2018, 2019 and 2020.
Therefore, BTC is currently more stable than gold, the dollar strength index, the Nasdaq, and the S&P 500, which is measured by 5-day volatility.
Only five times before has Bitcoin’s 5-day volatility fallen below all of these indices simultaneously (referred to as “relative volatility compression”). Historically, compression of BTC’s relative volatility lasted only 1-2 days.
However, the current relative volatility compression event has already lasted four days, setting a record, according to Arcane data. So the current relative volatility compression is an anomaly, he said.
Aside from the relative volatility compression that occurred on September 29 last year, all such events have been followed by sharp volatility over the past 30 days. Therefore, Bitcoin is likely to see sharp fluctuations over the next month.
Arcane notes that the implied volatility of BTC options has also reached an all-time low as BTC volatility is currently declining. This makes the straddle strategy more attractive because investors can “take advantage of a cheap option premium to react to sudden market movements,” Arcane said.