- The price of the king coin fell below the usual threshold, while traditional assets rose above it.
- Bitcoin’s on-chain and trading volume fell, but there was a slight increase.
From Bitcoin [BTC] 30-day volatility fell in July and approached its lowest level since January 2019, an Aug. 2 Bloomberg report revealed. Typically, BTC volatility decreases when the price compresses and there are very few price swings in the market.
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Among the conventional assets
But according to the report, the currency’s volatility did not go lower than normal. It also fell below that of assets in traditional markets, including the S&P 500, gold and stocks linked to technology companies.
Bloomberg, who got his data from K33s Bendik Schei and Vetle Lunde’s research article noted that the drop in trading volume played a role in the contraction in volatility. Usually consistent volume indicates stable liquidity and leads to less price volatility.
But when trading volumes are extremely high, Bitcoin’s inconstancy increases. And according to Schei and Lunde, BTC’s trading volume, in a “rare feat,” hit its lowest since November 2020. The pair explained:
“The market is clearly in an unprecedented stable phase, which has typically acted as a huge pressure valve for volatility once it finally flares up again. Traders must therefore be vigilant.”
Bitcoin fluctuated around the same price throughout July, ending the month at 3.32% reject. This came after excitement and price spike in the wake of BlackRock’s ETF approval.
At the time of writing, BTC appeared to have recovered somewhat after dropping below USD 29,000 earlier this week. BTC volatility had also tried to move in the same direction. But according to Santiment, the week price volatility remained at its lowest throughout the year.
Source: Sentiment
Moving traders can return
Meanwhile, Matt Maley, chief market strategist at Miller Tabak + Co, opined that traders appear to have abandoned Bitcoin and the wider crypto market.
According to Maley, the inability of BTC’s price action to present clear opportunities drove the determination. Stressing that it was not a good sign, he said:
“Active traders seem to have left the crypto market, at least for now. That’s not good for an asset breaking below a sideways range.”
However, BTC volatility could change if the current on-chain transaction volume and trading volume continues its recent upward trend. For context, on the chain transaction volume takes into account the number of Bitcoins moved between wallets.
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On the other hand, trading volume is the amount of BTC bought or sold within a given time frame. At the time of writing, on-chain volume had risen to $19.66 billion, while daily volume rose to $19.73 billion.
Source: Sentiment
In the example where both metrics continue to increase, BTC could end its price compression and potentially move towards $30,000 once more.