Bitcoin’s low volatility can sometimes act as sign of upcoming move that no one expects, as usual
Bitcoin’s most recent price performance clearly shows that the premier cryptocurrency does not have enough buying or even selling volume behind it, resulting in a lack of volatility in the market. Fortunately, extremely low volatility sometimes causes big moves in the market that we all expect.
Bitcoin’s volatility is decreasing
Following the massive crypto market crash back in June, most crypto market participants were scared away from trading assets like Bitcoin and immediately closed most of their positions to avoid further losses.
The lack of volume in the market is the main reason for Bitcoin’s anemic performance. Since June 21, Bitcoin has lost just under 5% of its value while regaining around 5% on June 25, which shows that the first cryptocurrency remains in a state of consolidation and that the real buying or selling power is not in the crypto market.
How volatility pushes price up or down
With the lack of volatility, almost any significant outflow or inflow of funds on the market can cause a crash or a strong rally since, with the decreasing volatility, we usually see decreasing liquidity, which is the main tool for controlling stability on the market.
With Bitcoin’s weekly average volatility remaining at around 5%, the market should historically expect a spike in volatility in the short to medium term which, unfortunately, could push Bitcoin in either direction.
At press time, Bitcoin is still consolidating in the $22,000-$18,000 range as both bulls and bears are not sure when to inject funds into the market again.