Calm Before the Storm? Bitcoin and Ethereum Volatility Hits Historic Lows

The prices of the two largest cryptocurrencies, Bitcoin and Ethereum, have entered a remarkably stable period, with volatility figures dropping to multi-year lows in August 2022.

Data from crypto analytics firm Kaiko shows that the 90-day volatility for Bitcoin and Ethereum has declined to 35% and 37%, respectively. This is the lowest volatility the top tokens have seen since 2016 and is even below the current volatility of commodities like oil, which stands at 41%.

Bitcoin and Ethereum 90-day volatility drops by 50%

Compared to August 2021, the 90-day volatility of Bitcoin and Ethereum has fallen by over 50%. Even the daily volatility of Bitcoin is now at its lowest point in five years.

While August tends to be a positive month for crypto assets, this weakened volatility is viewed as a bullish signal by some analysts. Periods of compressed price fluctuation can often presage a breakout.

“We saw similarly low volatility back in 2020 before the massive bull run,” noted Cryptocon, a prominent Bitcoin technical analyst, on social media platform X. “However, extended sideways price action is still a danger.”

This period of relatively listless trading comes after a tumultuous year for the crypto market, which has seen digital asset prices plummet from all-time highs in late 2021. The declining momentum could represent investor indecision in the absence of strong directional cues.

However, others contend that lower volatility points to growing crypto market maturity. Either way, all eyes will be on whether Bitcoin and Ethereum can regain their notorious price dynamism, or if this period of uncharacteristic calm will continue into the fall.