Bitcoin 7-day Volatility Archives

16th November 2022

Bitcoin 7-Day Volatility Comes Alive As FTX Collapse Shakes Market

Data shows the Bitcoin 7-day volatility has come alive during the last week as the collapse of crypto exchange FTX has shaken up the market.

Bitcoin 7-Day Volatility Has Spiked To Values Above 7%

According to the latest weekly report from Arcane Research, the current 7-day volatility levels are the second highest seen in this year.

The “volatility” is an indicator that keeps track of the average daily returns in the price of Bitcoin over a specific period of time.

While this timespan can be of any length, the “7-day” and “30-day” versions of the metric are the most natural.

A notable feature of the volatility indicator is that it only measures returns using the closing prices on each day. This implies that any intraday market movements aren’t accounted for by the metric, so as long as the price returns to the norm by the end of the day.

When the volatility has a high value, it means the price of the crypto has fluctuated a lot recently. On the other hand, low values suggest the BTC market has been displaying stale activity.

Now, here is a chart that shows the trend in the Bitcoin 7-day and 30-day volatilities over the past year:

Looks like the values of the metrics have spiked up in recent days | Source: Arcane Research’s Ahead of the Curve – November 15

As you can see in the above graph, both the 7-day and 30-day versions of the Bitcoin volatility have observed a sharp increase recently.

Before this rise, the indicator had very low values for a month or so, with the 7-day version especially reaching historical lows of 1%.

The collapse of FTX and the resulting market crash is behind the crypto’s sudden turn to volatile nature during the last week.

The 7-day volatility has surged above the 7% mark, reaching levels only behind the yearly high of June, when 3AC went bankrupt.

Historically, Bitcoin has become calmer following big spikes in the volatility like the one being observed right now.

However, the report notes that the current market environment is filled with contagion-related uncertainty and abnormal positioning in derivatives, so the market will likely continue to be volatile in the coming days.

BTC Price

At the time of writing, Bitcoin’s price floats around $16.7k, down 5% in the last week. Over the past month, the crypto has lost 12% in value.

The below chart shows the trend in BTC’s price over the last five days.

The value of the crypto seems to still be consolidating around $16.7k | Source: BTCUSD on TradingView
Featured image from Jievani Weerasinghe on Unsplash.com, charts from TradingView.com, Arcane Research

2nd November 2022

Bitcoin Rally Fails To Budge 30-Day Volatility As It Stays At 2-Year Lows

Data shows the latest Bitcoin rally has failed to make the 30-day volatility budge, as the metric has remained at 2-year lows.

Bitcoin 30-Day Volatility Currently Has A Value Of Just 1.7%

As per the latest report released by Arcane Research, BTC’s price stabilizing around $20.5k has resulted in the daily volatility remaining low.

The “daily volatility” is an indicator that measures the percentage changes in the daily closing price of Bitcoin averaged over a specific period of time.

While this timespan can be of any length, the 7-day and 30-day volatilities are the most common and useful version of the metric.

When the daily volatility has a high value, it means the crypto’s price has been observing large fluctuations recently.

On the other hand, low values of the indicator suggest that the market has been stale during recent days.

Now, here is a chart that shows the trend in the Bitcoin weekly and monthly volatilities over the past year:

The value of the two metrics seems to have been pretty low in recent weeks | Source: Arcane Research’s Ahead of the Curve – Nov 1, 2022

As you can see in the above graph, the 7-day Bitcoin volatility has been at a low level for a while now, and the 30-day version of the metric has also plunged down recently.

The 7-day volatility has actually slightly gone up in the last week as a result of the rally, reaching a value of 2.2%. This is, however, still notably lower than the 3.1% yearly average of the indicator.

After the monthly volatility’s recent decline, the metric has hit around 1.7%, a low level not seen since two years ago. The reason for such low values of this indicator is the endless consolidation that the crypto observed around the $19k level.

While there has been some burst of activity recently, it hasn’t been enough to make a dent on this timescale.

Another contributing factor is that since the initial chaotic increase, Bitcoin has once again fallen back to sideways movement, this time around the $20.5k level. This is why the 7-day volatility, though higher than before, is still historically low.

BTC Price

At the time of writing, Bitcoin’s price floats around $20.4k, down 1% in the last week. Over the past month, the crypto has gained 6% in value.

The below chart shows the trend in the price of the coin over the last five days.

Looks like the value of the crypto has so far held above the $20k mark | Source: BTCUSD on TradingView
Featured image from Jievani Weerasinghe on Unsplash.com, charts from TradingView.com, Arcane Research

6th October 2022

Calm Before The Storm? Bitcoin Volatility At Historically Low Levels

Data shows the Bitcoin 7-day volatility has plunged down recently to pretty low values. Here’s what has historically happened following instances of such a trend.

Bitcoin 7-Day Volatility Has Declined To Just 1.6% In The Past Week

According to the latest weekly report from Arcane Research, the recent sideways trend in the BTC price has lead to the volatility dropping down to very low values.

The “volatility” is an indicator that measures how the daily returns of Bitcoin have deviated from the average during a specific period.

Here is a chart that shows the trend in the 7-day and 30-day versions of the metric for BTC over the last year:

The 7-day value of the indicator seems to have gone down in recent days | Source: Arcane Research’s The Weekly Update – Week 39, 2022

As you can see in the above graph, the 7-day Bitcoin volatility has plummeted down over the past week or so.

The metric’s value is now only 1.6%, a very low level that has only been seen a few times during the last twelve months. The 30-day volatility, though, has still stayed up recently at about 3.4%.

The reason behind such low weekly values of the indicator is the sideways consolidation between the $19k and $20k levels that the crypto’s price has been stuck in lately.

Such low 7-day volatility values have usually been succeeded by significant surges in the metric, as noted by the report.

This happens because leverage easily builds up during these periods. High leverage markets are highly volatile since any sudden price moves can liquidate large amounts, which further amplifies the price change.

Since low volatility periods obviously don’t have any significant price spikes, leverage can go unflushed and thus pile up.

As the Bitcoin 7-day volatility has been very low recently, this kind of buildup is again expected to take place in the market. And indeed, the BTC-denominated perpetual futures open interest has shot up and is sitting at an all-time high right now, supporting the idea of the market being overleveraged:

Looks like the value of the metric has been climbing up recently | Source: Arcane Research’s The Weekly Update – Week 39, 2022
BTC Price

At the time of writing, Bitcoin’s price floats around $20.1k, up 3% in the last week. Over the past month, the crypto has gained 1% in value.

The below chart shows the trend in the price of the coin over the last five days.

The value of the crypto has been moving sideways since the surge a couple of days back | Source: BTCUSD on TradingView
Featured image from Kanchanara on Unsplash.com, charts from TradingView.com, Arcane Research