Bitcoin’s fourth week of tight trading ended on Sunday. Volatility readings reached levels not seen since January.
Data from 99Bitcoins show that the 30-day estimate of bitcoin ( BTC ) has dropped to 0.74%. This is its lowest reading since January 16 (71%).
Bitcoin’s volatility is a measurement of the price changes in a day. If the reading is high, then it is a riskier investment because price swings are harder to predict.
data show that T3I’s BitVol Index is used to measure 30-day implied volatility of bitcoin options contracts. It has also dropped to its lowest implied value since its creation more than four year ago.
CVI’s Crypto Volatility Index has also dropped to its lowest levels ever recorded. The index is based on the implied volatility of bitcoin ( and ETH over a 30 day period.
The market predicts how much a particular asset’s value will fluctuate in the future. Realized volatility measures how much that asset’s value has changed in the actual past.
Cryptocurrency has seen daily moves of 5%-10%, although trading has been relatively quiet in recent months. Digital assets are more volatile during periods of excessive market exuberance.
Bitcoin, like ether has been in a range since the end last month, after its price jumped by more than 15 percent following Blackrock’s filing of a spot BTC ETF on June 15. The asset’s range of trading this month has been reduced to between $31,800-$29,500.
The low volatility readings indicate that the crypto markets are disinterested and waiting for developments on traditional markets to take place, as July’s temporary speculations about digital assets fade.
CME FedWatch information predicts that the Federal Reserve will raise interest rates another 25 basis points in part one of their last two rate increases this year. The Federal Open Market Committee (the Fed’s main body for monetary policies) is expected to meet Tuesday.
A rise in interest rates from the Federal Reserve can lead to higher borrowing costs, which may reduce the appeal of investing in volatile assets. In the previous decade, falling interest rates fueled speculative activities.
The expected hike could occur despite the fact that the rate of inflation has been rapidly declining, as evidenced by the recent CPI figures.
Computers and smartphones are down 5.2%, and used cars 7.7%. Airline tickets have dropped 18.9%. Ira Kalish , Deloitte’s chief global economic , wrote last week that food and housing prices, which are up 5.7% a 7.8% respectively, keep inflation high.
He said that the Fed was concerned about the possibility of significant wage increases, which would make it hard to suppress inflation. This has not happened yet.