18 Oct 2022

2-year low daily volatility

The crypto market remains heavily rangebound in a low volatility environment as BTC and ETH see slight gains of 2% and 3%, respectively, after a tranquil week in the market.
Market update (4).svg
The last week has been flat, except for Thursday’s CPI release. The CPI release introduced volatility to the market, as CPI once again came in hotter than expected. This caused interest rate hike expectations to increase as the market fully priced in a 75bps hike by the FED in the coming FOMC, causing knock-on effects on asset prices, leading most assets to move in a highly correlated manner.
Source: Tradingview (Coinbase, Binance US)
Thursday’s CPI price reaction carries similarities to the July 13th CPI release, where the market saw a strong downside reaction before a swift recovery in risk assets.Apecoin is this week’s worst performer, trading down 13% on news that Yuga Labs is facing a probe by the SEC into whether sales of some of its offerings violate federal law.
Source: CoinGecko,
Bitcoin leading the way in a flat October
Still no clear trend in October, as the crypto market stays flat. Bitcoin and ether are gaining market shares relative to the other large caps this week, while small caps are struggling.
Source: Bletchley Indexes, Tradingview (Coinbase)
All indexes are still marginally in the red so far in October, but the overall flat performance persists this week as well.Bitcoin is marginally on the plus side in October, up 0.6%. BTC and ETH have shown strength relative to the top 10 by market cap over the past week, stealing market shares from the rest.
Source: CoinMarketCap * Weekly change in percentage points
The Large Cap Index and the Mid Cap Index are down approx. 1% so far this month after a slight recovery over the past few days.The Small Caps Index is struggling the most and is still down 5% in October after touching levels closer to -10% this weekend before recovering. The crypto market is still highly aligned with the stock market this month. Both bitcoin and Nasdaq are up ~1% in October, with the correlation staying at record highs.
Approaching one full year of fear in the market
The Fear and Greed Index is relatively unchanged this week, down to 22 from 24 last week. We’re approaching a full year of bearish sentiment and a fearful market. The sentiment crashed down in the “Fear” area in mid-November last year and has mostly stayed dreadful ever since. Except for a few spikes out of the “Fear” area and above 50, the index has been hovering between fear and extreme fear for more than 11 months.
Highest daily volume in October last week, but still trending downwards
Source: Tradingview
The bitcoin spot volume has continued to decline this week, an expected observation with the current low volatility. However, the spot volume on Binance isolated has actually recovered slightly since last week, while other spot exchanges have seen a decline of another 10% on average over the past week. We saw a significant increase in activity just before the weekend, with a lot of intraday action on Thursday with the U.S. CPI release. Still, the trading activity quickly diminished over the weekend. Thursday saw the highest daily volume so far in October, but the trend is still downwards on most spot exchanges.
2-year low daily volatility
The daily bitcoin volatility has continued lower over the past week, now touching levels not seen in two years. The 30-day volatility is now at 1.9%, the lowest since late October 2020.
Source: Tradingview (Coinbase)
The 7-day volatility has fallen even lower, touching levels below 1% this weekend, bottoming at levels not seen since July 2020. While the daily volatility tells a story of an idle bitcoin price, the story is different if we look at intraday activity. Bitcoin saw price fluctuations of almost 9% within 12 hours after Thursday’s U.S. CPI release. The daily volatility only measures closing prices each day and doesn’t capture intraday activity. Nevertheless, the bitcoin price has closed within a $500 range for the last ten days, and we still believe that volatility will arrive sooner rather than later
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