BTC markets very rarely reach periods of such low realized volatility, with almost all previous cases preceding a highly volatile move. Historical examples below the current value of 28% have preceded significant price movements in either direction
On the off-grid side, volatility is also on the rise in the derivatives markets. This week the implied volatility (IV) of options reached a record low of 48%.
Several previous instances of this low IV were preceded by sharp moves that were often exacerbated by a deleveraging (liquidation cascade) in the derivatives and DeFi markets.
Trading volumes in the futures markets have also fallen to multi-year lows of 24 billion per day. This brings us back to levels last seen in December 2020, before the bull cycle broke the 20k ATH level of the 2017 cycle.
This could signal additional momentum strength due to reduced liquidity if the market gets a boost in either direction.
The Bitcoin market is poised for volatility, with both realized and implied option volatility falling to historical lows. The cost behavior shrinks to the decision point where spot prices intersect with the cost of short-term holders.
Previous cases in which this set of conditions prevailed have preceded sharp price movements, with previous bearish cycles in both directions.This post is based on this twitter thread.