• Bitcoin has been highly volatile in the past few weeks, but according to a recent report by Bitfinex, it may be entering a transitional phase with lower volatility.
• The drop in leverage and implied volatility suggest that Bitcoin’s price may become less volatile in the coming weeks.
• The crypto community has mixed reactions to the Bitfinex report, with some seeing it as an opportunity to buy BTC at a lower price.
Bitcoin Price Forecast: Lower Volatility, More Stability
Bitfinex recently predicted that Bitcoin is entering a new era of stability and lower volatility. This prediction is supported by two key metrics: Estimated Leverage Ratio and Implied Volatility.
Estimated Leverage Ratio
The Estimated Leverage Ratio measures leverage in the Bitcoin market which dropped to a low of 0.195 last week – a reading not seen since December 2021. This coincided with a 12% crash in Bitcoin’s price from $56,500 to $49,500.
At the same time, Implied Volatility also dipped to near-historical lows ranging between 48% and 55% for seven, 30, 90, and 180-day expiries (source: CryptoQuant & Bitfinex).
Possible Return To Spot Market Dominance?
These drops in leverage and implied volatility suggest that Bitcoin might be returning to an era dominated by the spot market similar to early 2021. This could mean that its price will become less volatile in the coming weeks.
Mixed Reactions From Crypto Community
The Bitfinex report has received mixed reactions from the crypto community; while some view it as positive news for BTC’s stability others are more skeptical considering the unpredictable nature of cryptocurrency markets. There are also those who see this as an opportunity to buy bitcoin at a lower price point overall.