Bitcoin more stable than gold, DXY and NDQ, what it means

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Data shows that Bitcoin has been more stable than Gold, DXY, Nasdaq and S&P 500 recently, here’s what history says could follow next.

Bitcoin’s 5-day volatility fell below that of Gold, DXY, Nasdaq and S&P 500

According to the latest weekly report from Arcane Research, BTC has been more stable than these assets for a record length of time already this year. “Volatility” is an indicator that measures the deviation of daily returns from the average for Bitcoin.

When the value of this metric is high, it means that the crypto has recorded a higher amount of returns compared to the average, which suggests that the coin has recently involved higher trading risk. On the other hand, low values ​​imply that there have been no significant fluctuations in the price in recent days, which shows that the market is stale.

Now, here is a chart that shows the 30-day volatility trend for Bitcoin over its entire history:

The value of the metric seems to have plunged in recent days | Source: Arcane Research’s Ahead of the Curve – January 10

As the chart above shows, Bitcoin’s 30-day volatility is currently at very low levels, as the price has been trading mostly sideways for the past few weeks. The indicator’s current values ​​are the lowest since 2020, but they are still above some of the lows of previous bear markets.

One consequence of this recent flat move has been that BTC has become more stable than assets like gold, DXY, Nasdaq, and the S&P 500. To compare the volatilities of these assets against each other , the report used 5-day volatility (not 30-day or 7-day).

The table below highlights periods in the life of BTC where the crypto’s 5-day volatility was simultaneously lower than all of these traditional assets.

Seems like such occurrences have been a very rare event | Source: Arcane Research’s Ahead of the Curve – January 10

As the chart shows, there have only been a handful of instances where Bitcoin’s 5-day volatility has been lower than Gold, DXY, Nasdaq, and S&P 500 at the same time. The report calls these events periods of “relative volatility compression.”

It seems that before the last streak, the highest duration of this trend was only 2 consecutive days. This means that the current period of relative volatility compression is already the longest in the history of the coin.

Another interesting fact in the chart is the total Bitcoin returns that were seen over the 30-day period following the first volatility compression date in each of these cases. With the exception of one event (September 29, 2022), all other periods of volatility compression were followed by the price becoming highly volatile and recording strong returns.

It now remains to be seen if a similar pattern will also follow this time around, with Bitcoin experiencing a crazy 30-day stretch following this very flat price action.

BTC price

As of this writing, Bitcoin is trading around $17,400, up 3% in the past week.

BTC has surged in recent days | Source: BTCUSD on TradingView

Featured image by Jievani Weerasinghe on Unsplash.com, charts by TradingView.com, Arcane Research

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