Bitcoin’s (BTC) price may have been sleep-inducing of late, according to digital asset analytics firm K33 Research, but that could soon change. The firm’s senior analyst Vetle Lunde pointed out that the five-day volatility of bitcoin has sunk below that of gold, the Nasdaq 100 and the S&P 500 – a situation that has only happened a few times in recent years and has always preceded periods of wild price swings.
The past six weeks have seen bitcoin trading in an increasingly tighter range, mostly between $29,000-$30,000, and for the past few days rarely moving out of the $29,000-$29,500 area. At press time, it was changing hands at $29,100.
The 30-day volatility of BTC has recently dropped to near a five-year low, while trading volumes and derivatives activity have also declined sharply. Lunde commented that a deep crypto sleep tends to be followed by a violent wake-up, and that the market is clearly in an unprecedented stable stage, which has typically acted as a massive pressure valve for volatility once it finally reignites.
Potential catalysts for the eruption of volatility could be upcoming decisions on spot BTC ETFs and a court ruling in the lawsuit between GBTC fund issuer Grayscale and the U.S. Securities and Exchange Commission (SEC). Lunde advised that gradual but aggressive BTC accumulation is my preferred strategy at the time being, and that buying farther dated out of the money call and put options could be a good contrarian strategy.