Bitcoin (BTC) Becomes Less Volatile Than Stocks, Cause Of Concern?

Experts believe Bitcoin’s (BTC) price has become less volatile than stocks, while still struggling to surpass the $20,000 level. It seems like a positive development for Bitcoin, but crypto traders believe it is not positive under low-volume conditions. In the last few weeks, the trading volume has dropped significantly from $40 billion to falling below $20 billion.

Bitcoin (BTC) Volatility Drops Sharply Against U.S. Stock Market

According to Noelle Acheson, author of the “Crypto is Macro Now” newsletter, Bitcoin’s (BTC) 30-day realized volatility falls sharply in recent days. Coin Metrics data indicates that realized volatility has dropped to nearly 52% from 64% last month on an annualized basis.

Meanwhile, Jake Gordon at Bespoke Investment Group says the BitVol volatility gauge falls to a new low, down to 69 from over 110 in May. The CoinMarketCap data also indicates a massive drop in trading volume. In the last two days, the trading volume has dropped over 6% to nearly $25 billion.

While low volatility is considered good in the stock market, low volume with low volatility is a problem for Bitcoin. Most traders typically enter the Bitcoin market for swing trades, utilizing volatility in BTC price movements.

ARK Investment Management analyst Yassine Elmandjra said:

“Low volatility in Bitcoin might not necessarily be a good thing, especially if it’s on low volume. So while low volatility is perhaps an indication that Bitcoin is becoming more boring and less contrarian, low volatility on low volume might not be great for Bitcoin.”

The crypto market, which suffered due to the Terra-LUNA crypto crisis and DeFi liquidity crisis, remains under pressure as the Federal Reserve and other central banks hike rates to curb inflation. Crypto investors, including institutional investors, have moved away from the space.

BTC Price Under Pressure

Bitcoin (BTC) price struggles to surpass the $20,000 level amid low volume and U.S. hawkish rate hikes. The BTC price is down over 3% in a day and 7% in a week.

Moreover, the BTC price loses earlier gains to fall below $18,695 ahead of the U.S. CPI data. If the Fed continues to raise rates, people may start taking money off the market. In fact, low volume coupled with low volatility will cause Bitcoin prices to fall further.

After the release of CPI data, the BTC price falls further as September is worse-than-expected. The CPI increased by 8.2% on a YoY basis against the expected 8.1%.