Analysis: Bitcoin Volatility Hits Lowest Since 2016 as Leverage Exits Reduce Liquidation Risk

07/22 09:15

On July 22, Crypto Quant analyst Axel Adler Jr stated that Bitcoin has recently entered a low-volatility compression phase, with the 30-day moving average of 1-week actual volatility dropping to 28.3, a decrease of approximately 31% from the peak of 41.6 on June 25, and falling to about the 8th percentile of historical distribution since 2016, meaning that 92% of past trading days had higher volatility than the current level. Meanwhile, the 30-day momentum of Bitcoin's open interest (OI) relative to market capitalization has been negative for 21 consecutive days, indicating that market leverage is continuously declining rather than accumulating in a low-volatility environment. The current price has rebounded about 11.4% from the June low, but this has not been accompanied by an expansion in derivatives positions, reducing the risk of a large-scale liquidation cascade. However, Bitcoin remains below the 200-day moving average of $72,666. If volatility rises above 35 again but the price still fails to stand above the long-term moving average, it may increase downside risk.
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