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5 July 2022
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Bitcoin Volatility is at Lowest Position as BTC Correlation with S&P 500 Reached 5-year Highs

Bitcoin volatility is at the peak as the price is hovering between $9,000 and $9,300. Some analysts are taking Bitcoin as an asset because it expressing behavior like the stock market due to its decreased volatility.

Even in the times of Coronavirus pandemic, and in the recent Twitter hack, the price value of the leading asset does not subject to volatility. However, altcoins, in comparison, have shown significant volatility since March lows.

Recently, crypto trader and analysts, Josh Rager, found out that historical volatility have reached 40:

“Bitcoin historical volatility (HV) nearing 40. $BTC volatility this low has historically led to major price action between 30% to 60% movement in the following weeks From current price: 30% move to the upside is $12,200, and a 30% move to the downside is $6,500. Put your seatbelt on.”

The volatile nature, which is a feature of Bitcoin, is now decoupled from the digital asset based on the data of the recent past weeks. The A latest report by Ecoinometrics reveals that low volatility with every passing day result in the formation of ascending triangle.

“The argument boils down to something simple. Historically speaking the current volatility is very low. So unless there was a structural change in the market volatility should come back up. And with higher volatility comes a breakout.”

In the traditional markets, Bitcoin, most of the time, compared with the S&P 500. And this time, the correlation between the S&P 500 and the top digital asset reached a 5-year high value.

“Less price movements with less traded volume means a lot of the trading that does happen has a short term bias. And this might at least partially explain the correlation,” Nick from Ecoinometrics said while talking to a crypto news outlet.

Volatility will back if Bitcoin Decouples from Stock Market

The volatility will return back to the crypto markets if it becomes successful to decouple from the legacy markets, and for this, some whales will have to leave the ground. People who come into the crypto market to get rich quickly may leave the market soon.  

“I would expect this high correlation to die down when volatility returns to Bitcoin. We are only a couple of whale trades away from that.”

In the past, investors from the stock markets criticized Bitcoin for its high volatile nature.

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