Volatility in the crypto markets has been declining since the start of 2021 and is now near its all-time lows. After a short-lived surge last month due to the decision on the Grayscale ETF case, markets have returned to their quiet state.
90-day annualised volatility for both Bitcoin and Ethereum has dropped to its lowest ever level, except for three separated occurrences: the Terra collapse, the FTX collapse and the banking contagion in March 2022. The larger economic environment has also become more stable, with the Nasdaq’s 90-day volatility declining.
The lack of volatility has had an immense impact on liquidity in the crypto space, with capital flight and a decrease in trading volume. Binance’s fiat trading volume has dropped by 95% since its peak in 2021 and is now at its lowest point in two years.
Ethereum is now trading at a similar volatility to Bitcoin, which is a positive sign but also a sign of the declining volatility in crypto markets. Tight monetary conditions, scandals and a regulatory crackdown have all affected the crypto space.