Bitcoin volatility increases, but remains far from historical levels

the central theses

• In the past two weeks there was an increased volatility on the cryptoma markets
• Bitcoin fell from $ 29,000 to $ 26,000 two weeks ago before recovering for a short time and then falling again
• The low liquidity means that the market is ripe for large movements, but the trade volume is still suppressed
• In the future, the volatility expected from the market should return

The year 2023 was a strange year for crypto. The extreme volatility for which the sector has become so well known was missing.

, even though the price of Bitcoin has risen by 55 % this year. But instead of the usual tips and free cases, it was a slow and gradual increase.

In the past few weeks, however, volatility has increased. It is not quite at the level that we are used to, but also no longer at an all -time low. Two weeks ago, Bitcoin fell from $ 29,000 to $ 26,000, including a decline of 7 % within ten minutes.

last Thursday he rose by 6 % and rose again to $ 27,700. Two days later it had made these profits again and noted at $ 25,900.

Although the price development of the past two weeks for Bitcoin conditions is not dramatic, it shows at least a more detailed picture of what we expect from the asset.

The upswing last week was led by a positive court ruling to the Grayscale Bitcoin Trust. A body of the District of Columbia in Washington's District Court, consisting of three judges, decided that the SEC wrongly rejected the Bitcoin ETF proposed by Grayscale without explaining its reason.

These profits have now been given up again. The SEC said late Thursday in a number of submissions that more time would be needed to check the multitude of ETF applications submitted in recent months.

As already mentioned, the rampant volatility has been one of the business cards of this financial value since its introduction for fourteen years ago-and even this recent increase is relatively low and seems to be due to ETF messages. For this reason, 2023 was unusual - the lack of volatility before the past few weeks was more surprising than the recent abrupt increase.

volatility should return to the previous level

but this attack of volatility is hardly noteworthy for Bitcoin conditions. In addition, the investigation of the market structure suggests that we should not expect a subdued activity for too long.

one of the main reasons for this is liquidity. The order books on the Bitcoin markets are as thin as it has been for a long time. This means that less capital is required to move the prices, which reinforces both upward and downward movements.

A look over the entire room shows that prices have recovered this year, but the volumes have continued to be at the lowest level for several years and continues to flow from the room.

trade volume and volatility go hand in hand. It therefore makes sense that we have observed a decline in the latter because investors have deducted capital and have withdrawn on the risk curve in view of the difficult macroeconomic conditions.

However, the liquidity situation in conjunction with the peculiarity of the cryptoma markets - and the fact that volatility never subsided for a long time - that it would not be a surprise if the subdued markets would increase again. In the past two weeks there has been a movement in this direction, but on the whole, this is nothing compared to what we have seen in the past, and not to what we will see again in the future.