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Bitcoin volatility is approaching all-time lows; Is BTC primed for a breakout?

Bitcoin volatility is approaching all-time lows; Is BTC primed for a breakout?

After experiencing significant price swings in the first half of 2022, the value of Bitcoin (BTC) appears to be finding the much-needed stability touted to contribute to the asset’s maturity. With BTC’s value consolidating in the $19,000 – $20,000 range, the price has translated into the asset hitting historically low levels of volatility. 

In particular, as of October 21, Bitcoin volatility was almost at an all-time low after weeks of price stabilization in the current range, data by crypto trader Livercoin indicates

Bitcoin volatility chart. Source: TradingView

According to the trader, before the current levels, Bitcoin had hit a two-year volatility low. Notably, low volatility emerged, with Bitcoin correcting from an all-time high by almost 70%, with the asset being battered by the prevailing macroeconomic factors characterized by high inflation and interest rate hikes. 

Triggers of Bitcoin’s low volatility 

It is worth noting that Bitcoin-suppressed volatility is an outcome of several factors, with reduced trader interest ranking high. Notably, Findbold’s report on October 20 indicated that investors are removing Bitcoin from exchanges, with the value at some point hitting 40,572 BTC in a single day. 

In this case, the trend points to investors’ possible ‘HODL’ mentality as they anticipate a possible Bitcoin future rally. 

Although Bitcoin’s low volatility is a welcomed metric, a section of the market has sounded an alarm noting the price could drop further. As reported by Finbold, Steven McClurg, the chief investment officer at digital-asset fund manager Valkyrie Investments suggested that 

the volatility will likely accelerate further as Bitcoin continues to be weighed down by the prevailing macroeconomic conditions. 

Concerns over Bitcoin’s low volatility 

Concerns about the low volatility are emerging since Bitcoin continues to record a muted trading volume. Amid the extended bear market, trading has plunged by almost 50% from the $100 billion recorded at the start of the year. 

Furthermore, Bitcoin’s current low volatility level is unusual since, for the first time, the rate has fallen below some stock market products like the Dow Jones index.

In the meantime, Bitcoin was trading at $18,950 by press time, a drop of almost 1% in the last 24 hours. 

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk. 

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Paul L.
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