Before the sharp price decline on June 7, Bitcoin’s price volatility was nearing historic lows, showcasing an unusual period of stability for the leading cryptocurrency.
Historic Low Volatility Levels
Bitcoin’s price movement between May 24 and June 7 was notably stable, placing it among the “bottom 6% of occurrences” for volatility over any 15-day period in Bitcoin’s history, according to Swan Bitcoin chief investment officer Rapha Zagury. Zagury highlighted this rare stability in a June 7 post on X, showing that Bitcoin’s 15-day rolling volatility was at 23%, indicating an extended period where Bitcoin traded within a narrow range.
Seems like $BTC is stuck in a range. Although I hate price predictions, I think there's value in learning from the past. So let me revisit the thread below and update the numbers.
"What happens to #btc price after low vol periods? (2024 version)" https://t.co/kNdpUj2jnR
— Alpha Zeta | Rapha Zagury (@alphaazeta) June 7, 2024
Sudden Price Decline
Following this period of low volatility, Bitcoin experienced a sharp 3.33% decline in price, dropping to $69,264. This decline came after the release of the U.S. Employment Situation Summary Report, which showed stronger-than-expected job growth. This report suggested that the Federal Reserve might not cut inflation rates on June 11, a metric closely watched by Bitcoin analysts.
Historical Outcomes of Low Volatility Periods
Zagury pointed out that Bitcoin’s price behavior during previous periods of similarly low volatility often resulted in significant movements. Historically, the average return over the next 30 days after such low-volatility periods was 20.95%, with returns ranging from a minimum decline of 32.06% to a maximum increase of 218.40%.
When looking at a longer timeframe, the outcomes are even more striking. Over the course of 365 days following similar low-volatility periods, the average return was 820.82%, with the minimum return being 55.59%.
Learning from the Past
Zagury emphasized that while past performance is not necessarily indicative of future results, there is “value in learning from the past.” The historical data suggests that periods of low volatility in Bitcoin often precede significant price movements, highlighting the potential for both substantial gains and losses in the near future.
Bitcoin’s stability leading up to June 7 was an anomaly in its typically volatile history. As the market watches for the Federal Reserve’s next move, the data suggests that significant price action may be on the horizon, reinforcing the importance of understanding and anticipating market dynamics.
