- The average spread between the past month’s peak and trough across the 10 largest cryptocurrencies has only been around 23%, comparable with equities.
- Straddling the US$20,000 level, Bitcoin’s volatility has dipped below that of the S&P 500, something that’s only happened on four other occasions in the cryptocurrency’s history.
Having long been synonymous with volatility, Bitcoin and other cryptocurrencies are now confounding market-watchers with narrow moves and languishing volatility, trading with tight ranges that are thinning margins for market makers and volatility traders.
According to data compiled by Bespoke Investment Group, the average spread between the past month’s peak and trough across the 10 largest cryptocurrencies has only been around 23%, comparable with equities.
Since late 2017, no other period has seen this level of serenity in the cryptocurrency markets.
Activity in cryptocurrency markets has also slowed markedly from its usual near-daily wild swings with the T3i Bitcoin volatility index at 62, down from a 2022 high of 140 in May.
Straddling the US$20,000 level, Bitcoin’s volatility has dipped below that of the S&P 500, something that’s only happened on four other occasions in the cryptocurrency’s history.
Bitcoin’s calming might not necessarily be great news as it is coinciding with lower volumes meaning that it will not take much to crash in the event of a downturn or other unforeseen economic shocks.
Some investors are viewing the lack of volatility as a negative as they entered the space precisely because of the wild swings, which provide plenty of opportunity.
As cryptocurrencies become less “casino-like” in nature, it could nevertheless provide an opportunity for institutional investors or family offices who had been sitting on the sidelines to gain a more stable point of entry.
The correlation between stocks and cryptocurrencies has lessened in recent days although they have traded in tandem for most of the year.
The 60-day correlation coefficient of Bitcoin and the S&P 500 currently stands around 0.61, down from 0.70 earlier this month.
