Bitcoin's Historic Low Volatility Met with Sharp Price Drop, Reveals Swan Bitcoin's CIO
Summary:
Bitcoin's price showed unprecedented lows in volatility in the 15 days leading up to its sharp drop on June 7, according to Swan Bitcoin's Chief Investment Officer Rapha Zagury. Following this period of notably low movement, Bitcoin's value fell by 3.33%. Zagury highlighted that average returns following past periods of low volatility have been significant. However, he cautioned that past performance may not indicate future results.
In the 15 days leading up to its sharp drop on June 7, Bitcoin (BTC) showed a remarkable lack of volatility, reaching unprecedented lows in its history. The interval from May 24 to June 7 was counted in the "lowest 6% of instances" of volatility, as per Rapha Zagury, the chief investment officer at Swan Bitcoin. He pointed out that the volatility figure of 23% for the last 15 days - shown by the blue horizontal line - seemed remarkably subdued, suggesting that Bitcoin had been "trapped in a trading band".
Based on data from CoinMarketCap, following this 15-day spell within a timid 7% trading range, fluctuating from $66,936 to $71,656, the value of Bitcoin fell steeply by 3.33%, landing at $69,264. This downturn was driven by the publishing of the United States Employment Situation Summary Report, which indicated stronger job growth than predicted. This might imply that the U.S. Federal Reserve wouldn't cut inflation rates on June 11 - a regularly watched measurement for Bitcoin price forecasts. As of the time of writing, Bitcoin stands at $69,246.
Reflecting on the past, Zagury shed light on Bitcoin’s price performance in previous low volatility periods or lower. In the next 30 days, the average yield was 20.95%, the smallest yield further dropped 32.06%, while the top return was at 218.40%. The results become even more impressive over the following 365 days. Even though the smallest yield for this period stands at 55.59%, the average yield escalates to 820.82%.
Zagury, however, maintained that these historical patterns do not necessarily predict future performance, stating, "there's worth in studying the past."
Note: This text does not provide investment guidance or suggestions. All investment and trading actions have risks, and it's recommended that readers conduct their own due diligence prior to making decisions.
Published At
6/9/2024 8:31:44 AM
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