Due to recent declines, the bitcoin (BTC) volatility index has risen to its highest level since three months ago. In fact, the fluctuations of the bitcoin price over the last 10 days on the US dollar have risen to 65%, the highest level since November 6th, 2019.
As of mid-November, the 10-day volatility index had fallen below 30%, and then rose to 60% on three occasions: late November, mid-December and mid-January.
Yesterday, however, it jumped above 65%, indicating some agitation.
In fact, BTC’s price volatility indices at 30 and 60 days yesterday rose to 1.5% and 1.2%, respectively.
The last time the 30-day index was above 1.5% was on December 23rd, 2019, after which it fell to 0.8% on February 9th, 2020.
The 60-day index, on the other hand, is still lower than it was on January 20th, but it seems to be growing.
Emmanuel Goh, who manages the Skew crypto-derivatives tracker, points out that a possible cause could be the liquidation of some long positions with perpetual swaps on BitMEX during Wednesday’s decline, i.e. technical transactions with high leverage derivatives, but the bitcoin market after yesterday’s decline still appears to be weak.
Although the price of BTC has never fallen below $9,000 and has never exceeded $11,000 since late January, the sudden daily fluctuations within this band inevitably generate volatility.
So, although mid-December prices are a long way off, when they dropped as low as $7,000, the agitation continues to prevail, perhaps because the $10,500 barrier has not been broken.
Federico Izzi, an independent analyst and contributor at The Cryptonomist, explains:
“In reality, since the beginning of the year, volatility had plummeted to its lowest level since six months ago, that is, it had only dropped to the levels reached last summer or October 2019. Only in the last 48/72 hours has volatility increased significantly, to the extent that even today bitcoin is fluctuating around 5%. Yesterday, during the flash crash, it lost as much as 10% in a few minutes. Moreover, the volatility is even higher among other cryptocurrencies, such as Ethereum, EOS, Bitcoin Cash. However, contextualizing these movements, the bullish trend which began at the beginning of the year, for now, does not seem to have been affected. The recent price increases, from December until three days ago, were structural, less violent than those of the spring of last year, for example, and without strong fluctuations”.