Bitcoin
Main Bitcoin (BTC) price indicators point to period of calm in the crypto market
A week ago, Arthur Hayes, former CEO of cryptocurrency exchange BitMEX, he said Bitcoin (BTC) has bottomed out, but the expected upward movement will likely be slow.
Now, an indicator called the volatility risk premium (VRP) suggests the same, signaling a relatively low volatility market environment in the future, which could be seen as a positive development by long-term investors.
The VRP reflects the tendency of option-induced implied volatility of an underlying asset, a measure of expectations of price turbulence, to exceed realized volatility over time. The spread represents premium option sellers’ demand for additional risks associated with future uncertainty and price volatility.
The one-month VRP has dropped from 15% to 2.5% since the Bitcoin blockchain implemented the halving of mining rewards on April 20, according to data tracked by Bitfinex analysts. The VRP calculation is based on the difference between Volmex’s Bitcoin 30-day implied volatility index (BVIV) and the one-month realized volatility (VBRV).
“The significant narrowing of the VRP indicates a realignment of market expectations towards a more stable and predictable environment post-halving,” Bitfinex analysts said in a note shared with CoinDesk. “The market consensus appears to be that future volatility may be lower than previously anticipated following the halving.”
In other words, uncertainty has decreased and market participants anticipate more predictable market conditions.
On April 20, the Bitcoin blockchain cut per block supply issue to 3,125 BTC from 6,125 BTC in a quadrennial event that halved the pace of supply expansion.
The consensus is that global debt concerns and massive US fiscal spending will help Bitcoin repeat its record of solid gains in the months after the halving.
At the time of writing, the leading cryptocurrency by market cap was changing hands at $62,400, virtually unchanged since the halving. Prices, however, have recently recovered from lows near $56,500.
While the ether (ETH) The one-month VRP dropped from 18% to 8.5% remains elevated compared to bitcoin, a sign that traders see the future of ether as relatively uncertain.
“One possible reason for Ethereum VRP to fall less is that the SEC ETF decision on May 23, 2024 acts as additional uncertainty for the ETH price. This also confirms that VRP captures the premium related to future uncertainty,” Bitfinex analysts said. The US Securities and Exchange Commission is facing multiple calls for spot ether exchange-traded funds.