The crypto market is a constant game of flipping the table, and the current environment is characterized by low volatility, prolonged consolidation, and extremely low sentiment. A significant, table-flipping opportunity is brewing.
Bitcoin Volatility and Market Trend Analysis
Recently, Bitcoin's price has been falling, but its volatility has reached a critical point. The current volatility is at 1.25%. What does this level mean? Let's analyze it with historical data.
Historical Low Volatility Periods
Since 2018, Bitcoin's volatility has approached the low range of 1% to 2% during these seven key periods:
The Last Drop of the 2018 Bear Market:
During the bear market, Bitcoin's price fluctuated for 91 days. Such low-volatility consolidation usually doesn't exceed three months. After 91 days of consolidation, Bitcoin experienced the BCH fork, leading to a two-month market downturn.
2018 Bear Market Bottom Formation:
After a major crash, it fluctuated for 105 days (around three months), then rose from $3,000 to $14,000.
Post-3/12 Crash Recovery:
Consolidated for 77 days, then Bitcoin's price surged from around $7,000 to $64,000.
Previous Bear Market:
Before the FTX collapse, Bitcoin fluctuated for six months, followed by a market crash.
Post-FTX Collapse:
The market fluctuated for only 1.5 months, but the price soared from $15,000 to $30,000.
Last August-September:
After two months of consolidation, Bitcoin's price increased from $25,000 to $70,000.
Current Market:
We are currently in a low-volatility consolidation phase that has lasted over three months.
Market Characteristics of Low Volatility Phases
Two common features can be observed from these six low-volatility phases:
Consolidation Time Won't Exceed Three Months:
Typically, the market's low-volatility phase lasts no more than three months.
Trend Follows Consolidation:
After each consolidation phase, a trend inevitably follows, whether it's a surge or a crash.
Current Market Analysis
Currently, our consolidation phase has exceeded three months, and market fluctuations seem to have reached an extreme. Some might feel the volatility is high now, but that's a visual illusion. Bitcoin's price is now at $60,000, so a 10% fluctuation equals $6,000. It looks substantial, but it's only 10%. In contrast, when Bitcoin was $3,000-$4,000, a $6,000 fluctuation meant 200% volatility.
Recent Market Operation Suggestions
In the six representative low-volatility periods, I shared options operations on Twitter during the FTX collapse. Back then, I bought both call and put options, and the market went up. Before the market direction truly appears, we should engage in volatility trading rather than betting on price movements.
When the market direction is down, there's usually an initial fake-up signal before the downtrend begins. Conversely, if the market is up, there's often a fake-down signal before the uptrend starts. For example, in the 2020 DeFi market, despite a September downturn, the market ultimately surged.
Future Outlook
Currently, market sentiment is low, and volatility is at 1.4%. I believe the market is likely to rise. After each low-volatility phase, there's usually a major opportunity, such as:
2019: IEO
2020: DeFi
2023: First wave of LSD inscriptions
End of 2023: Second wave of inscriptions
Therefore, during this low-volatility phase, we should focus more on on-chain narratives and market trends to seize future investment opportunities.
