BTC Volatility Falls Below Gold, Dollar, Nasdaq and S&P 500

• Bitcoin’s (BTC) 5-day volatility has fallen below that of gold, the dollar strength index, Nasdaq, and the S&P 500, a phenomenon known as „relative volatility compression“.
• This is only the fifth time that this has happened in the past and is an indication of BTC’s increased stability.
• Historically, this phenomenon has only lasted for 1-2 days; however, this time it has already endured for 4 days, setting a record.

Bitcoin’s (BTC) price has been on an upward trajectory over the weekend, breaking past $17,000. However, in the first 10 days of 2023, BTC has been trading relatively flat with low volatility, as is typical during a bear market. This stability is reflected in the derivatives market and is driven by lower trading activity, indicating a reduction in speculative demand for the largest cryptocurrency by market cap.

BTC’s 30-day volatility has sunk to June 2020 levels, and its 5-day volatility has fallen below that of gold, the dollar strength index, Nasdaq, and the S&P 500, a phenomenon known as „relative volatility compression“. According to an Arcane Research report, this is only the fifth time that this has happened in the past and is an indication of BTC’s increased stability.

Historically, this phenomenon has only lasted for 1-2 days; however, this time it has already endured for 4 days, setting a record, as per Arcane data. This is unusual, and Arcane commented that this could lead to more volatility in the short-term. It remains to be seen whether or not this event will lead to an increase in volatility, or if it is indicative of a larger trend towards increased stability in the crypto markets.

Nevertheless, the fact that BTC’s 5-day volatility has fallen below that of all of the aforementioned indices is an indication that the crypto markets are maturing and that institutional investors are becoming more comfortable with the asset class. This could be a sign of good things to come for the crypto markets, and investors should be prepared for both volatility and stability in the days to come.