The volatility of Bitcoin has drastically decreased, hitting historically low levels due to low market liquidity and macroeconomic uncertainty. The Bitcoin Volatility Index shows that the 30-day volatility was 1.52%, which is less than half of the yearly average values. According to Glassnode, such low volatility levels were only seen for 19.3% of Bitcoin’s price history, indicating an incoming uptick in volatility.

Long-Term Holders and On-Chain Transfer Volumes

Despite the low on-chain transfer volumes of Bitcoin across cryptocurrency exchanges, long-term holders were seen making a move in the recent correction. Glassnode categorizes coins older than 155 days in a single wallet under long-term holder supply. The long-term holder binary spending indicator shows previous instances when long-term holder spending increased, which was usually followed by a volatility uptick. Glassnode’s monthly realized volatility metric for Bitcoin has slipped below the lower bounds of the historical Bollinger Band, suggesting an incoming uptick in volatility.

Options Market Data

The options market data also indicates an incoming uptick in volatility. Bitfinex’s latest Alpha report shows that the DVOL index, which represents the market’s expectation of 30-day future implied Bitcoin volatility, slipped to 45 from a reading of 50 right before the expiry, which represents a yearly low. Currently, the options traders are showing risk aversion and have increased their bearish positions, moving from May to June. The put-to-call ratio for Bitcoin options increased from 0.38 to 0.50. Bitfinex analysts currently expect potential market turbulence and short-term price fluctuations in June, especially close to the expiry toward the month’s end.

While Bitcoin’s volatility has decreased to historically low levels, on-chain and options market data suggest an incoming uptick in volatility in June. The low volatility levels are expected to rise to an equilibrium level, where the market moves primarily due to the accumulation or distribution of long-term holder supply. The options market data indicates that traders are increasingly turning bearish on Bitcoin, potentially causing market turbulence and short-term price fluctuations, especially close to the expiry toward the month’s end. The maximum pain levels for May and June’s expiration at $27,000 and $24,000, respectively, may act as a magnet according to options market positioning.

Analysis

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