• Bitcoin’s 7-day volatility has hit a new low of 0.7%, the lowest since July 2020.
• This is according to the latest weekly report from Arcane Research.
• Low volatility periods involve less risk than when the market is highly volatile.
Bitcoin’s price has been stuck in a state of endless consolidation recently, and this is reflected in the sharp decline of the cryptocurrency’s 7-day volatility. According to the latest report from Arcane Research, the 7-day volatility for Bitcoin is now at its lowest level in two and a half years, sitting at a value of just 0.7%.
Volatility is a metric that measures the deviation in the daily returns for Bitcoin from the average over a specified period. This rolling average period can be of any length, but the most useful versions of the metric are the ones taken over 7 days and 30 days. When the value of the indicator is high, it means BTC is currently observing large fluctuations compared to the average recently. However, when the value is low, it suggests that the price of the crypto hasn’t been showing many returns in recent days.
The 7-day and 30-day Bitcoin volatilities have both declined significantly in the last few weeks and the 7-day version of the metric currently has a value of 0.7%, the lowest observed since July 2020. This is indicative of a period of low volatility and risk, as it implies that the price of Bitcoin is not showing any major changes from the average.
Low volatility is generally seen as a positive sign for the cryptocurrency industry, as it shows that the market is relatively stable and predictable. This allows traders to gain a better understanding of the asset’s behavior, allowing them to make more informed decisions when trading.
The low volatility also presents an opportunity for investors to get involved in the market without having to worry about the risk of a sudden price crash. While there is still some risk involved in the cryptocurrency market, it is significantly reduced when the volatility is low, allowing investors to take a more relaxed approach to trading.
Ultimately, the low volatility indicates that the cryptocurrency market is in a healthy state. While this may not be the most exciting time to be involved in the market, it is certainly a good sign for the future of Bitcoin and other digital assets.