Bitcoin has seen a significant drop to just 0.74% within 30 days. This marks the lowest reading since January 16. Bitcoin concluded its fourth week of trading with limited fluctuations on Sunday, resulting in volatility measures reaching levels not witnessed since the year commenced.
The estimate for the world’s largest digital asset, bitcoin (BTC), has dropped to a mere 0.74% over 30 days. This marks its lowest reading since January 16, with data obtained from 99Bitcoins indicating a percentage.
Bitcoin’s Volatility Decreases Amidst Stable Trading
Bitcoin’s volatility refers to the extent of price fluctuations within a single day, indicating the level of risk associated with the investment. A significant reading implies higher unpredictability in price movements, making it more challenging to anticipate potential swings.
The data reveals that T3I’s BitVol Index, which assesses the 30-day implied volatility for bitcoin options contracts, has recently reached its lowest reading since it was introduced over four years ago. This suggests a significant decline in volatility. CVI’s Crypto Volatility Index, which aims to emulate the functionality of the S&P 500’s VIX, has recently reached its lowest recorded levels. This index evaluates the implied volatility of Bitcoin and Ether (ETH) for 30 days.
It implied volatility serves as the market’s anticipation of future price fluctuations for an asset. On the other hand, realized volatility quantifies the historical changes in the asset’s price.
Daily fluctuations of 5% to 10% are standard in cryptocurrency. However, trading activity has remained relatively subdued in recent months. Periods characterized by excessive market enthusiasm tend to result in heightened volatility for digital assets.
Bitcoin and ether, cryptocurrencies that have garnered attention in recent months, have been trading within a specific range since the end of last month. This range-bound movement followed an increase of more than 15% in their prices when Blackrock’s spot BTC ETF filing was announced on June 15. This month’s trading shows narrower price fluctuations for the asset, with values between $31,800 and $29,500 observed.
July’s temporary speculation for digital assets is fizzling out as low volatility readings suggest disinterested crypto markets. Patiently, they watch for upcoming developments in traditional markets.
Federal Reserve’s Rate Hike Decision & its Potential Impact on Crypto Markets
Based on CME FedWatch data, the Federal Reserve is anticipated to implement a 25 basis point increase in interest rates. This would mark one of the two projected rate hikes forecasted for this year. The Federal Open Market Committee, responsible for setting monetary policies, will hold its meeting on Tuesday.
When the Federal Reserve raises interest rates, it usually increases borrowing costs. This can make investments in more volatile assets less appealing. On the other hand, when interest rates fall, it can encourage speculative activity, as we have seen in the past decade. Inflation declines, consumer prices drop in CPI data, yet an expected hike sparks discussions about future changes.
According to Ira Kalish, Deloitte’s chief global economist, prices for numerous commodities have decreased: airline tickets have dropped by 18.9%, used vehicles have fallen by 5.2%, and tech goods have dropped by 7.7%. Computers and cellphones, in particular, have witnessed 5.2% and 16.1% decreases. However, food and housing costs have risen by 5.7% and 7.8%, respectively, resulting in continuous inflation. Last week, the Wall Street Journal reported on this.
According to sources from the Federal Reserve, one concern they have is the potential impact of a tight labor market on wage increases. This, in turn, could have significant effects on inflation control. However, as of now, this fear has not materialized.
Related Reading | ETF Applications Drive Bitcoin Rally, Crypto Markets Boom