In a recent tweet, on-chain analyst _Checkɱate from Glassnode highlighted a significant development in the world of cryptocurrency. Realized Bitcoin volatility has plunged to unprecedented levels since the aftermath of March 2020, marking an extraordinary period of tranquility in the typically volatile market.
Analyzing data across timeframes ranging from one month to one year, _Checkɱate underscored the remarkable silence surrounding Bitcoin. This subdued volatility trend has historically been associated with the aftermath of bear markets, signifying a re-accumulation phase.
Adding further insights in a subsequent Twitter thread, the analyst acknowledged the infamously erratic nature of Bitcoin prices. Yet, the current situation stands out as a potentially unparalleled instance of stability. The price range has contracted to an extent where less than 5% of trading days have exhibited more significant fluctuations.
This leads to the pertinent question: how will this newfound calm be factored into derivatives markets? One striking revelation pertains to the options implied volatility for Bitcoin, which has been slashed by half compared to the levels witnessed during 2021-2022.
Checkɱate highlighted that the options market for BTC is now pricing in implied volatility ranging from 24% to 52%, a stark contrast to the 60% to 100%+ levels seen in the previous market cycle. It suggests an ongoing and pronounced reduction in volatility.
Remarkably, the Put/Call ratios are hovering near or at all-time lows. The prevailing trend reveals a notable inclination of traders toward long calls. Consequently, this has driven the 25-delta skew to its lowest recorded point.
Intriguingly, put options are presently priced at their most affordable levels, raising the question of whether Bitcoin has shed its infamous volatility or if there’s a potential mispricing of implied volatility for puts.
Bitcoin Price Analysis
Bitcoin is currently trading at $29,095, reflecting a negligible 0.00% loss within the past 24 hours. Concurrently, Bitcoin dominance has experienced a reduction of -0.34%, leading to BTC’s representation accounting for 47.88% of the overall cryptocurrency market share. At the time, its market capitalization stands at $565.68 billion, having sustained no change over the preceding 24-hour period.
A comprehensive analysis of Bitcoin’s technical indicators indicates a prevalent bearish trend in the long-term outlook. Consequently, forecasts predict a decline of $663.50 in its value within the next week, resulting in a projected price of $28,407.00 by August 14th, 2023. In the short term, a machine learning algorithm has identified an ongoing bearish trajectory for Bitcoin.
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