Expectations for the approval of Bitcoin (BTC) Exchange-Traded Funds (ETFs) have led to significant volatility in the cryptocurrency market. However, some analysts suggest that an event almost a week ago has contributed to a decrease in the volatility of the leading cryptocurrency.
Market researchers at Greeks.live analyzed the current options market, indicating that the immediate effects of the anticipated ETF approval have largely subsided. Bitcoin’s volatility reached a new low, marked by declines in both realized volatility (RV) and implied volatility (IV), with short-term IV dropping below 45%.
RV reflects the actual price fluctuations of a token, while IV measures market expectations for future price movements. The decline in both RV and IV suggests a period of reduced price volatility and decreased uncertainty about Bitcoin’s short-term movements. This could lead to Bitcoin experiencing the direct effects of decreased volatility soon. Risk-averse institutional investors may seek a more stable environment for their investments, potentially increasing their interest in the leading cryptocurrency.
However, analysts and investors who profit from price volatility may not find as much benefit in a less volatile environment. This could limit trading opportunities and potential gains. Prolonged low volatility might also reduce the interest of speculators, potentially affecting Bitcoin’s overall trading activity and liquidity.
At the time of writing, Bitcoin’s price had seen a decrease of 0.65% over the last 24 hours, trading at $42,507.73. Additionally, Bitcoin’s Market Value to Realized Value (MVRV) ratio also significantly dropped during this period.