Bitcoin and Ethereum are now moving with less volatility than oil

• According to the new data from Kaiko research, the 90-day volatility indices for Bitcoin (BTC) and Ethereum (ETH) have reached multi-year low levels, decreasing by 35% and 37% respectively.
• Market volatility is the frequency and magnitude of price movements, either up or down. It is calculated based on how much a price has changed over a certain period of time.
• Although it has led the volatility among measured assets including Nasdaq and gold, oil has decreased since last year.

Has the low volatility in Bitcoin and Ethereum prices deepened and become even less volatile than oil? Could this be due to the summer months?

Decrease in Volatility in Bitcoin and Ethereum

The leading cryptocurrencies Bitcoin and Ethereum, known for their high ups and downs, seem to be taking a break in the summer. Now, even surpassing oil, these digital assets have become less volatile.

According to the new data from Kaiko research, the 90-day volatility indices for Bitcoin (BTC) and Ethereum (ETH) have reached multi-year low levels, decreasing by 35% and 37% respectively. This has caused the volatility of the largest cryptocurrencies to fall below the volatility of oil, which is at 41%.

Market volatility is the frequency and magnitude of price movements, either up or down. It is calculated based on how much a price has changed over a certain period of time – a higher percentage represents higher volatility, while the opposite represents lower volatility.

Historically, cryptocurrencies have been seen to be more volatile than oil, with greater frequency and magnitude of price movements, leading Kaiko analyst Dessislava Ianeva to describe the current market as “unusual.” However, according to the Kaiko analyst, this volatility has significantly decreased because “Bitcoin is continuing to mature as an asset.”

Although it currently leads volatility among measured assets, including Nasdaq and gold, oil has decreased since last year. Ianeva stated that the volatility of oil has decreased from 63% in July 2022, but has increased since April.

As a reason, it seems to be due to an increase in geopolitical tensions and China’s “disappointing reopening,” as she told COINOTAG. The country had implemented strict Covid-19 restrictions until recently, but the lifting of these restrictions does not seem to have had the expected positive economic impact.

Liquidity Drought in Bitcoin and Ethereum

Kaiko’s research also shows that Bitcoin and Ethereum are at multi-year low levels in terms of liquidity and trading volume, according to Ianeva. This may have triggered the low volatility and surprising leadership of oil.

For Ianeva, these figures have a two-fold response. On the one hand, she told COINOTAG that this is likely due to the “traditionally slow summer months.” On the other hand, she said, “a market looking for a scenario.” A spot Bitcoin ETF, which she believes is still “months away,” could turn things around in favor of the market.

This does not seem to be a distant possibility, following the unexpected application by BlackRock and the movements of other applicants with impressive application approval records.