Bitcoin has remained in the $16,000–$18,000 area amid macroeconomic uncertainties and FTX contagion fears.
Bitcoin’s historical volatility is approaching levels last seen before the late 2020 bull run, and investors with plenty of wealth are buying coins.
Bitcoin’s low realized volatility shows the month’s tranquil price activity. This is the lowest realized volatility since the third quarter of 2020, before the latest bull run, excluding the FTX catastrophe. “Volatility was this low at the bottom of the 2018 bear market before that,” Blockware’s weekly report said.
“Calm waters do not persist long in bitcoin,” the paper said.
Realized volatility measures daily price fluctuations, regardless of direction, over a certain period. It’s backward-looking, whereas implied volatility shows options traders’ predictions for price turmoil in the following week/month.
Last Thursday, Bitcoin’s annualized one-month realized volatility hit 38%, a two-year low.
“Investors should ready for another rapid move shortly because pleasant sailing does not continue in the crypto market for long,” the Dec. 12 Bitfinex Alpha report added, referring to ultra-low realized volatility.
The paper stated that wild price changes follow an increase in implied volatility and a prolonged period of low realized volatility.
Short-term and long-term implied volatility indicators are down at press time, matching realized volatility. The market expects a small change due to low implied volatility.
After the holidays, traders may buy options to increase implied volatility.
Another reason to predict market movement is whales’ resumed BTC accumulation.
Since the Bitcoin plummeted below $18,000 on Nov. 9, Bitfinex reported that large wallets have accumulated over 400,000 BTC ($6.73 billion).
Since early November, whales have resumed accumulating. (Whalemap) Whale accumulation resumed after BTC went below the June low in early November. (Whalemap)
The bubbles’ size symbolizes whale wallets’ coin accumulation, while the white line is bitcoin’s daily close price (UTC).
Large or “whale-styled” wallets received over 70,000 BTC last week. “120K BTC was accumulated at $16,100, which offers possible support given the quantity of buying,” Bitfinex added.
CoinDesk statistics showed bitcoin trading flat-to-positive near $16,900 at press time.