TL;DR
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Can you feel that?
It’s eery, right? The calm we’re experiencing.
We didn’t know Bitcoin had a ‘calm’ setting.
We’re used to it being almost permanently stuck on ‘erratic as a five year old that just chugged a gallon of Coke’ mode — bouncing up and down, adding/wiping billions from its total value each day.
But right now, the DVOL chart (which measures Bitcoin’s day-to-day volatility) is at the bottom end of a four month slide downwards — a time in which BTC’s price has moved from ~$73k to ~$56.5k, and bounced significantly between those two points in the meantime.
Here’s what that indicates:
Investors are less panicked, and with that, less inclined to seek out protective hedged investments — e.g. buying options that allow them to either buy or sell Bitcoin at a certain price in the future (which tends to increase volatility).
Good news:
Violent moves to the downside are less common in these moments.
Bad news:
Violent moves to the upside are less common in these moments.
Better news:
This is par for the course in financial markets. Investors tend to ‘sell in May and go away’ for the summer.
So we can all enjoy this calm without worrying that the sky is falling.
