Although cryptocurrencies are considered one of the most volatile assets, the last thirty days have been the least volatile for Bitcoin since November 2020. The standard deviation of the exchange rate is just above two per cent.
Bitcoin’s low volatility goes hand in hand with declining daily trading volumes. These are around five billion dollars for both Bitcoin and Ethereum (the two most widely used cryptocurrencies). Just a year ago, daily trading volumes for both cryptocurrencies were not infrequently above $30 billion.
“Trading volumes for both Bitcoin and Ethereum have declined significantly since last December. This is a sign of gradual de-risking in investors’ portfolios as macroeconomic uncertainty increases,” Kaiko Research said in its weekly review.
The calm before the storm?
According to analysts, this may be the proverbial calm before the storm, which may end in dramatic price changes that can go either way. It has happened several times in the past that reducing the volatility of Bitcoin has eventually led to a sharp price increase. “The seven-day volatility is above the 30-day level, which may indicate that the market is waking up,” said analysts at Arcane Research.