2020 has reached its half-point in less than 2 weeks and the digital asset industry is gearing up for the second half of the year. Betting against Bitcoin early this year would have been a grave mistake as the largest digital asset defied market odds and performed better than S&P 500, Gold, and so on after the March market collapse.
Bitcoin’s volatility has been its major strength this year as market turbulence has played in BTC’s favor for a majority of the period.
However, the price action has dried out late, and significant consolidation has been attained between $9k and $10k. Such stagnation has lowered its volatility levels, and according to the recent Coinmetrics report, daily volatility has reached its lowest point in the last three months.
Data indicated that the rolling volatility of BTC ‘s 30-day average had fallen below the 50 percent level and since November 2013, it has only happened 35 times. BTC rarely attains current volatility levels but such unexpected turnarounds were the theme of 2020.
The chart above illustrated the period of time when Bitcoin’s 30-day volatility has been below 50%. From the aforementioned 35 times, 80% of those periods had lasted less than 20 days, with 55% lasting less than 10 days. Hence, it is fair to say that Bitcoin’s 30-day rolling volatility has historically remained at subdued levels for only a short duration at a time.
In order to find whether the current trend is bullish or bearish, the report also listed out what happens after the volatility levels jump back above the 50% mark. The report stated,
“The results are mixed – sometimes price rises and sometimes it falls. The median and mean therefore both hover around 0% up to 40 days out.”
Bitcoin Realized and Implied Volatility levels low as well
Bitcoin’s volatility in terms of options pricing has also decreased in recent weeks. After a steady decline in Implicit Volatility since April, Bitcoin’s Realized Volatility underwent a major slump last week and RV levels dropped to 4.1 percent from 6.8 percent.
Although Realized Volatility accounts for the turbulence period that has already occurred on the market, low volatility levels may suggest exhaustion of buying pressure. Q2 2020 will also reach a conclusion by the end of June, as a new start for the digital asset will begin in Q3 2020.