“Come on Bitcoin, do something!”
The viral meme stars stick figure, plunging into the ground and depicting the need for a response — may summarise the current scene of the digital asset trading desk during a slow early summer day.
Certainly, bitcoin
BTC$105,434.25
Just hitting a new fresh high and still trades over $100,000, but P&L is declining every day due to short-term volatility chasers.
“Even if assets reach their all-time highs, Bitcoin volatility continues to decline with both realized and implicit measures. This decline in volatility is particularly pronounced among historically high price levels.”
Bitcoin’s implicit volatility is a low trend. (NYDIG study)
And despite macro and geopolitical headwinds that hit traditional assets hard, Bitcoin has created a cold summer vibe.
The volatility achieved by Bitcoin is also declining. (NYDIG study)
“This downtrend can last in the short term as the market is currently in a typically quiet summer months,” Nydig added.
Of course, this probably portrays a more mature market, and is perhaps a positive trend for Bitcoin as it potentially speaks to its original promise of “storage of value” as prices reach new new highs.
However, the more movements the more P&L opportunities the more they become, the more volatility they love. While fresh record highs may be great for long-term Hodlers, for short-term traders, those juicy breakouts make it harder to make money.
Why is it calm?
So, what drives these mild price actions?
NYDIG focuses on increasing demand from Bitcoin finance companies, which appear to be appearing everywhere, as well as increasing sophisticated trading strategies such as overriding options and other forms of volatility sales.
The market has become more professional and the prices remain calm unless you see some true black swan events (FTX, someone?) for the crypto.
opportunity
But everything is not lost – even if it’s not as advantageous as it appears, there is always an opportunity to make money.
“The decline in volatility has made both the rise through calls and the drawback protection through Puts relatively cheap,” Nydig said.
Translation: Hedge and Catalyst-Driven Play is where there may be money in this market. If you think something big is coming, this is probably the time to position yourself in a directional bet. And there are a few big things coming.
“For traders predicting market-moving catalysts, such as the SEC decision on GDLC conversion (July 2), the conclusion of a 90-day tariff suspension (July 8), or the findings of the Cryptoworking Group (July 22), this presents a cost-effective opportunity to position directional animals,” says Nydig.
So, the summer lull in Bitcoin may not be a complete dead zone. Rather, it is a set up for people willing to play the patience game and play hedges to trade potential market mobility events accordingly.