Bitcoin’s Volatility Lags Behind S&P500 and Gold in July

• ccording to a new report, Bitcoin’s 30-day volatility decreased in July and approached its lowest level since January 2019.
• When transaction volumes are excessively high, Bitcoin’s volatility increases. According to Schei and Lunde, BTC’s transaction volume reached its lowest level since November 2020, which they consider a “rare success.”
• Throughout the month of July, Bitcoin remained at the same price and ended the month with a 4.07% decrease. This occurred after the excitement and price increase following BlackRock’s ETF approval.

The Bitcoin market, which enthusiastically welcomed BlackRock’s ETF application, remained stagnant in July and reached its lowest volatility levels in a long time.

Bitcoin’s Volatility Decreased in July

According to a new report, Bitcoin’s 30-day volatility decreased in July and approached its lowest level since January 2019. Typically, BTC’s volatility decreases when the price is stagnant and there is minimal price fluctuation in the market.

According to the report, the cryptocurrency’s volatility was not lower than normal. Additionally, it fell below assets in traditional markets such as the S&P500, gold, and technology company stocks.

The data was obtained from a study conducted by K33’s Bendik Schei and Vetle Lunde, who stated that the decrease in trading volume played a role in the decrease in volatility. Generally, consistent volume indicates stable liquidity and leads to less price fluctuation.

However, when transaction volumes are excessively high, Bitcoin’s volatility increases. According to Schei and Lunde, BTC’s transaction volume reached its lowest level since November 2020, which they consider a “rare success.” They explained:

“The market is clearly in an unprecedented stable phase, which typically acts as a pressure relief valve when volatility eventually reignites. Traders should therefore be cautious.”

Throughout the month of July, Bitcoin remained at the same price and ended the month with a 4.07% decrease. This occurred after the excitement and price increase following BlackRock’s ETF approval. Currently, BTC appeared to have slightly recovered after falling below $29,000 earlier in the week. BTC’s volatility also attempted to follow the same direction. However, according to Santiment, the one-week price volatility continued to remain at its lowest level so far.

Can Traders Return?

Meanwhile, Matt Maley, the chief market strategist at Miller Tabak + Co, believes that traders have distanced themselves from Bitcoin and the broader crypto market. According to Maley, the lack of clear opportunities in Bitcoin’s price movement led traders to make this decision. While emphasizing that this is not a good sign, he said:

“Active traders seem to have distanced themselves from the crypto market, at least for now. This is not good for an asset that has fallen below a sideways range.”

Bitcoin’s volatility situation could change if the current on-chain transaction volume continues to rise. On-chain transaction volume refers to the amount of Bitcoin moving between wallets, while trading volume represents the amount of BTC bought or sold within a specific time period. At the time of writing, the on-chain volume had risen to $19.66 billion, while the daily volume had reached $19.73 billion.

If both metrics continue to increase steadily, BTC could break out of its price consolidation and potentially approach the $30,000 level again.