Bitcoin Volatility Drops by 50%: Is Interest in BTC Decreasing?

• The 90-day annual volatility rate for Bitcoin has dropped to 50%, nearly halving the high levels seen in the 2021 bull market.
• The recent actions of US-based regulators towards major market participants have also contributed to the HODLing trend.
• The dollar value locked in Bitcoin’s futures market open interest (OI) or futures contracts is at its lowest level in a month.

According to the data, Bitcoin’s volatility rate has dropped to 50% and there is a decrease in the amount of open positions.

Bitcoin’s Volatility Shows a Decrease

The decline in the crypto market has refocused attention on Bitcoin’s volatility, which has been one of the most talked-about topics. According to data provider Kaiko, the 90-day annual volatility rate for Bitcoin has dropped to 50%, nearly halving the high levels seen in the 2021 bull market.

90-Day Bitcoin & Ethereum Volatility

What seemed to be a long bull market period starting in the first quarter of 2023 has reversed. As clearly seen in the data, BTC’s monthly trading volume has been consistently declining since April.

Bitcoin Trading Volume

The decreasing volatility of Bitcoin could be a result of how investors perceive it. Glassnode’s Liveliness metric showed a trend indicating whether Bitcoin holders were more inclined to spend their tokens or hold onto them, and it had been declining for a long time. This indicated that most investors were taking action to withdraw their money from the market and HODL.

This evolved the idea that Bitcoin is seen as a long-term investment option rather than a short-term speculative asset. Additionally, the recent actions of US-based regulators towards major market participants have contributed to the HODLing trend.

As clearly seen in the chart below, the number of BTC on exchanges has dropped to around 2.28 million, implying a reluctance of investors to engage in trading.

Additionally, there were signs that the Bitcoin market was maturing and attracting the attention of leading financial institutions. BlackRock, the world’s largest asset management company, recently applied for a spot Bitcoin Exchange Traded Fund (ETF).

This move had the potential to make Bitcoin a legitimate asset class for investors with different risk tolerances.

Decrease in Open Positions in Bitcoin

According to Glassnode’s data, the dollar value locked in Bitcoin’s futures market open interest (OI) or futures contracts is at its lowest level in a month. OI has been declining since the beginning of June.