The general crypto market’s volatility has dropped significantly in recent weeks, and it is most evident in Ethereum

While the sentiment in legacy financial markets has been extremely unpredictable with the bout of volatility, the case is the opposite in digital assets. The price action in cryptos has replicated other riskier assets I laid out the relationship in my previous piece on Bitcoin’s correlations with U.S equities. However, the volatility has been largely declining in cryptocurrencies. And this is most evident from Ether’s chart above.

People familiar with the workings of the financial markets understand that low volatility price action is usually a precursor to breakout moves. And as I tweeted out earlier, low volatility bear market environments have preceded large bullish price moves in Bitcoin. Considering the current record low volatility in the second-largest crypto, it could be pointing to a breakout move in either direction.

Looking at the chart again, each of the previous times Ether’s 30-day realized volatility has dropped below 50% since 2018, it was followed by spikes of over 100%. According to the latest reading, the volatility has now hit a record low, entering unchartered territory — good for the faint of heart, but it could very well be the calm before the storm.

Considering ETH remains well above the most recent lows reached in June, a historically upbeat season for risk assets coming up & low volatility bear market environment theory playing out in its contemporary asset BTC, the risks are skewed to the bullish side. Keep in mind though, markets always have a mind of their own.

Disclaimer: This is just my personal analysis and is not be construed as any kind of investment advice. Please conduct your own due diligence.

 Originally Published on Medium

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