Bitcoin becoming less volatile than stocks may appear to be a good thing. However, crypto traders warn that in a low-volume environment, this may not be a good thing.
Bitcoin’s (BTC) 30-day realized volatility has dropped dramatically in recent days, according to Noelle Acheson, author of the “Crypto is Macro Now” newsletter. According to Coin Metrics data, realized volatility has dropped to nearly 52% from 64% last month on an annualized basis.
Meanwhile, Jake Gordon of Bespoke Investment Group reports that the BitVol volatility gauge has reached a new low of 69, down from over 110 in May. The CoinMarketCap data also shows a significant drop in trading volume. Over the last two days, trading volume has fallen by more than 6% to nearly $25 billion.
While low volatility is considered good in the stock market, low volume with low volatility is a problem for Bitcoin. Most traders typically enter the Bitcoin market for swing trades, utilizing volatility in BTC price movements.
Historically, Bitcoin has risen after a period of low volatility, so investors should keep an eye on the market. However, 2022 debunked myths such as Bitcoin being a hedge against inflation and being unaffected by stock market fluctuations. As cryptocurrency becomes more popular, new trends and developments are expected in the coming months and years.