Bitcoin’s volatility drops: Time to go long?

• Bitcoin’s volatility and price fell considerably.
• However, traders remained bullish.

The anticipation around the approval of the spot Bitcoin [BTC] ETFs brought along with it large amounts of volatility. However, as per certain analysts, the event, which took place almost a week ago, led to the declining volatility of the king coin.

Calm before the storm?

Market researchers Greeks.live analyzed the current options market, which showed that the immediate effects of the ETF’s approval have mostly subsided. 

Notably, Bitcoin’s volatility had reached a new low, marked by reductions in both Realized Volatility (RV) and Implied Volatility (IV), with short-term IV dropping below 45%.

Realized Volatility (RV) reflects the actual price fluctuations of an asset, while Implied Volatility (IV) gauges market expectations for future price swings. 

The decline in both RV and IV suggests a period of reduced price fluctuation and decreased uncertainty regarding Bitcoin’s short-term movements.

Possible impact on Bitcoin

Bitcoin could soon see the direct effects of the declining volatility. More risk-averse institutional investors might find their way towards the king coin, seeking a more stable environment for their investments. 

The aforementioned decline could also indicate increased market confidence and potentially pave the way for the broader acceptance of Bitcoin.

However, traders and investors who thrive on price fluctuations for profit may not reap ample benefits. For them, a less volatile environment may limit trading opportunities and potential gains. 

Additionally, a prolonged period of low volatility might lead to decreased interest from speculators, potentially impacting Bitcoin’s overall trading activity and liquidity.

Source: Greeks.live

Regardless, the Put-to-Call ratio of BTC steadily declined from 0.52 to 0.46 over the last few days. This indicated many traders were still bullish around BTC at press time.

Some positives and negatives

Coming to the price of the king coin, at press time, it was trading at $42,507.73, having declined by 0.65% in the last 24 hours. The MVRV ratio of BTC also fell significantly during this period. 

Thus, the number of profitable addresses holding BTC had fallen. This factor could bode well for the king coin, as these addresses may not want to sell their holdings just yet.

Read Bitcoin’s [BTC] Price Prediction 2024-25

The addresses not selling just yet may help support BTC’s current price levels. However, the declining Long/Short ratio of Bitcoin could cause harm to BTC’s future prospects. 

For context, a falling long/short indicator suggests that long-term holders had been declining. These long-term holders are usually less likely to sell their holdings.

Source: Santiment