How Bitcoin’s volatility dropped below gold, S&P 500 in July

• The king coin’s price fell below the usual threshold, as traditional assets rose above it. 
• Bitcoin’s on-chain and trading volume dropped, but there has been a slight increase.

Bitcoin’s [BTC] 30-day volatility sunk in July, nearing its lowest since January 2019, a 2 August Bloomberg report revealed. Typically, BTC volatility wanes when the price compresses and there’s a very small rate of price swings in the market.

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Underneath the conventional assets

But according to the report, the coin’s volatility did not go lower than usual. It also fell below that of the assets in the traditional markets including the S&P 500, gold, and stocks connected to tech firms.

Bloomberg, which obtained its data from K33’s Bendik Schei and Vetle Lunde research paper, noted that the trading volume dip played a role in the volatility contraction. Usually, a consistent volume indicates stable liquidity and leads to fewer price fluctuations.

But when trading volumes are extremely high, Bitcoin’s volatility increases. And according to Schei and Lunde, BTC’s trading volume, in a “rare feat”, reached its lowest since November 2020. The pair explained, 

“The market is clearly in an unprecedented stable stage, which has typically acted as a massive pressure valve for volatility once it finally re-ignites. Traders should thus be vigilant.”

For all of July, Bitcoin hovered around the same price, ending the month with a 3.32% decline. This came after excitement and price spike in the wake of BlackRock’s ETF approval. 

At press time, BTC seemed to have recovered slightly after dropping below $29,000 earlier in the week. BTC’s volatility had also attempted to follow in the same direction. But according to Santiment, the one-week price volatility remained at its lowest all year long.

Source: Santiment

Moving traders may turn back

Meanwhile, Matt Maley, chief market strategist at Miller Tabak + Co, opined that traders seem to have moved on from Bitcoin and the broader crypto market. 

According to Maley, the inability of BTC’s price action to offer clear opportunities triggered the resolve. While highlighting it was not a good sign, he said,

“Active traders seem to have moved on from the crypto market, at least for the time being. That’s not good for an asset that is breaking below a sideways range.”

However, BTC’s volatility state could change if the current on-chain transaction volume and trading volume maintain the recent uptrend. For context, on-chain transaction volume considers the number of Bitcoins that have moved between wallets.

How much are 1,10,100 BTCs worth today?

On the other hand, the trading volume is the amount of BTC bought or sold within a specific timeframe. At the time of writing, the on-chain volume had increased to 19.66 billion while the daily volume rose to $19.73 billion. 

Source: Santiment

In the instance where both metrics continually increase, then BTC might exit its price compression and possibly edge toward $30,000 one more time.