Bitcoin (BTC) volatility is declining on schedule but BTC price action could still “play catch up” with gold this year.
The latest data and analysis shows that despite sideways moves in Bitcoin, the largest cryptocurrency is behaving as expected.
BTC price volatility follows bear market pattern
With traders frustrated by a lack of tangible moves on BTC/USD, volatility is under the microscope at the start of 2023.
For analytics resource Ecoinometrics, however, there is nothing to worry about — Bitcoin is becoming more stable with time, and this is a feature, not a bug.
In Twitter comments on Jan. 2, it stated that “so far the pattern of less extreme volatile events as Bitcoin matures is confirmed.”
An accompanying chart of Bitcoin average one-month realized volatility distribution came with a description of BTC being “deep in a bear market.”
The data showed volatility ebbing at identical points in every four-year halving cycle, making 2022 firmly fit the trend of volatility decreasing more in each bear market year.Bitcoin average one-month realized volatility distribution chart. Source: Ecoinometrics/ Twitter
Ecoinometrics nonetheless noted that volatility is not yet at record lows, contrary to data from newer sources such as the Bitcoin historical volatility index (BVOL).Bitcoin historical volatility index (BVOL) 1-week candle chart. Source: TradingView
Bitcoin primed to follow stocks, gold, traders hop
In terms of triggers which could upend the status quo in volatility, investors may not need to look far.
Related: US will see new ‘inflation spike’ — 5 things to know in Bitcoin this week
In addition to the return of TradFi volume on Jan. 3, analysts are eyeing a potential game of cat and mouse between BTC/USD and gold.
“2023 will be one of the best yet for precious metals imo, will Bitcoin play catch up?” popular Twitter account Tedtalksmacro queried this week.
Comparing the two assets shows the impact of the FTX meltdown in November enduring for Bitcoin, while gold has seen a comparative renaissance. Until then, the two were in lockstep, data from Cointelegraph Markets Pro and TradingView shows.BTC/USD vs. XAU/USD 1-day candle chart. Source: TradingView
Stocks may also provide a quicker boost to BTC price performance, with U.S. futures trending up before the year’s first Wall Street session, copying the 1-2% gains in Europe from the day prior.
“Bitcoin looks ready for continuation, but always difficult to call when U.S. opens up tomorrow,” Michaël van de Poppe, founder and CEO of trading firm Eight, predicted at the time.“I’d be chasing the $16,6K area if you’re not in a position. Targets; $17-17,1K.”BTC/USD annotated chart. Source: Michaël van de Poppe/ Twitter
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