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Bitcoin Volatility Approaches Historic Lows Before Sharp Decline

ByDayne Lee

Jun 10, 2024
Bitcoin Volatility Approaches Historic Lows Before Sharp Decline

Bitcoin Volatility Approaches Historic Lows Before Sharp Decline

In the 15 days leading up to the significant drop on June 7, Bitcoin‘s price exhibited minimal movement, nearing some of the lowest volatility levels ever recorded over such a period. This stretch, from May 24 to June 7, was characterized by extremely subdued price action, placing it in the “bottom 6% of occurrences” for volatility in Bitcoin’s history, according to Rapha Zagury, Chief Investment Officer at Swan Bitcoin.

Analyzing the Low Volatility Period

During this 15-day window, Bitcoin traded within a narrow 7% range, oscillating between $66,936 and $71,656. Zagury highlighted this unusual quietness in a June 7 post on X, explaining:

“The horizontal blue line is the latest 15-day rolling volatility number of 23%. It certainly looks close to the lower level.”

This extended period of low volatility indicates that Bitcoin was “stuck in a range,” lacking the dramatic price swings typically associated with the cryptocurrency.

Date RangePrice RangeVolatilityObservations
May 24 – June 7$66,936 – $71,65623%Among the lowest 6% for 15-day volatility in Bitcoin history

The Sudden Decline

Following this period of calm, Bitcoin’s price abruptly fell by 3.33%, dropping from $71,656 to $69,264, as reported by CoinMarketCap. This decline coincided with the release of the United States Employment Situation Summary Report, which showed stronger-than-expected job growth. This report dampened hopes for a cut in inflation rates by the Federal Reserve on June 11, a factor closely watched by analysts for its potential impact on Bitcoin prices.

At the time of writing, Bitcoin was trading at $69,246, continuing to hover near the post-decline level.

Zagury provided insights into Bitcoin’s behavior during previous low-volatility periods. Historically, after such quiet stretches, Bitcoin’s price often exhibited significant movement. Over the next 30 days following similar periods of low volatility, the average return has been 20.95%, with the minimum return showing a further decline of 32.06%, and the maximum return reaching an impressive 218.40%.

Time FrameAverage ReturnMinimum ReturnMaximum Return
Next 30 Days20.95%-32.06%218.40%

When extending the analysis to a full year after these low-volatility periods, the outcomes become even more pronounced. The average return over 365 days stands at a staggering 820.82%, with the minimum return still a robust 55.59%.

Time FrameAverage ReturnMinimum ReturnMaximum Return
Next 365 Days820.82%55.59%

While Zagury was careful to note that past performance is not indicative of future results, he emphasized the value of learning from historical patterns. This perspective suggests that Bitcoin’s current low volatility could be a precursor to significant price movements in the coming months.

Market Reactions and Analyst Perspectives

The sudden dip in Bitcoin’s price following the quiet period has sparked various reactions from market analysts and traders. Many are closely monitoring the Federal Reserve’s upcoming decisions and economic indicators to gauge their potential impact on Bitcoin’s trajectory.

Some analysts believe that the recent employment report’s implications for interest rates could lead to increased volatility in the near term. As expectations adjust, Bitcoin might see heightened trading activity as investors react to changing economic conditions.

Others are focusing on Bitcoin’s historical patterns, drawing parallels between past low-volatility periods and subsequent market behavior. These observers suggest that while the immediate future might see further price adjustments, the long-term outlook remains robust, especially if Bitcoin follows its historical tendency to surge after periods of calm.

Bitcoin’s recent price stability and subsequent drop reflect broader trends in the cryptocurrency market, which often experiences cycles of low and high volatility. These patterns can be influenced by a range of factors, including macroeconomic developments, regulatory news, and technological advancements within the crypto space.

For investors and market participants, understanding these dynamics is crucial for making informed decisions. While periods of low volatility might seem uneventful, they can set the stage for significant price movements, offering opportunities for strategic positioning.

The period of subdued volatility leading up to Bitcoin’s sharp decline on June 7 serves as a reminder of the cryptocurrency’s dynamic nature. As Bitcoin continues to evolve, periods of quiet are often followed by notable price shifts, driven by both market-specific factors and broader economic trends.

Looking ahead, the lessons from Bitcoin’s historical volatility patterns could provide valuable insights for anticipating future market behavior. As always, caution and analysis are key in navigating the ever-changing landscape of cryptocurrency trading.


Featured image credit: Freepik

Dayne Lee

With a foundation in financial day trading, I transitioned to my current role as an editor, where I prioritize accuracy and reader engagement in our content. I excel in collaborating with writers to ensure top-quality news coverage. This shift from finance to journalism has been both challenging and rewarding, driving my commitment to editorial excellence.

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