• The crypto market has been stable recently, with bitcoin locked in the narrow range of $16,000 to $18,000 due to macroeconomic uncertainty and fears of FTX contagion.
• Bitcoin’s realized volatility has hit levels last seen before the late 2020 bull run, and investors with ample capital supply have begun to accumulate coins.
• According to Alpha report, investors should prepare for a swift move soon because the crypto market does not have a long period of smooth sailing.
The recent crypto market has been a period of relative stability, with the price of bitcoin locked in the narrow range of $16,000 to $18,000. This period of tranquility is due to a combination of macroeconomic uncertainty and fears of FTX contagion. Despite the lingering uncertainty, investors with ample capital supply have begun to accumulate coins, as bitcoin’s realized volatility has hit levels last seen before the late 2020 bull run.
Realized volatility refers to the magnitude of daily price movements, irrespective of direction, over a specific period. It is a backward-looking metric, while implied volatility is forward-looking and reveals options traders’ expectations for price turbulence over the coming week/month. Last week, bitcoin’s one-month realized volatility fell to a two-year low of 38%, which is the lowest since 2020. This low volatility could soon be disrupted, as the Dec. 12 issue of Bitfinex’s Alpha report suggests that an uptick in implied volatility with an extended period of low realized volatility is followed by wild price fluctuations.
The Alpha report warns investors to prepare for a swift move soon, as the crypto market does not have a long period of smooth sailing. Blockware Solutions’ weekly report also echoes this sentiment, noting that the low realized volatility is a sign of price action that will not last long. The report advises investors to be prepared for a sharp move in the near future.
Overall, the crypto market has been relatively quiet recently, but this tranquility is likely to be disrupted in the near future. Investors should pay close attention to the market, as high volatility and wild price fluctuations could be right around the corner.