Crypto Volatility Updates
“The mistake is thinking that there is an antidote to uncertainty”
The quote above summarizes the last few weeks in crypto markets. Since our last update, the overall market sentiment seems to have rebounded positively despite the recent news about the omicron coronavirus variant. With Bitcoin trending up towards the $60,000 range and the CVI much lower compared to last week, it does appear that investors stepped to the new week a lot more confident and optimistic.
This week’s takeaways:
- The crypto volatility index reached a high of 97 last week; compared to a high of 98.25 the previous week.
- Volatility measured on a week-over-week basis is seemingly lower.
- There are some signals that current volatility is gradually trending to its mid-term mean.
Surprisingly, last week was not a quiet one despite the US thanksgiving holiday. The holiday period tends to be an interesting time to follow the crypto markets because the true market sentiment is usually revealed in those rare moments of reduced trading volumes. Last week, however, was not a usual “holiday” because while our American colleagues were having turkey dinners, Bitcoin got as high as $59,439 and as low as $53,570 within 24 hours. Altcoins had a much more positive week, with Ethereum gaining 6% and Solana posting 7.5% returns for the week.
As of Monday, November 29th, the overall crypto markets seem to have rebounded with Bitcoin gaining over 5% returns on the day. Looking ahead, it will be important to see the mid-term market performance against the backdrop of the recently discovered omicron covid strain.
The CVI Index, which measures current and projected market sentiment was lower this week compared to last week. The CVI peak for the week was 97.24 on Wednesday, November 24th with a low of 89.78 on November 28th. Compared to last week, trading volumes were relatively lower given the holidays, so that could be an explanation for the slight drop in volatility across the market.
Looking at the ETHVI, which measures the 30-day implied volatility of Ethereum, there were some interesting movements to highlight.
- Volatility was on a lower trend for the week before spiking up briefly on Friday, November 26th, 2021
- Real volume reached its 3rd highest peak on both November 26th and November 30th, 2021 — corresponding to a spike in the ETHVI on both days to 109 range
With these uncertain week-over-week market fluctuations, investors should ensure that they implement strategies that “manage” risk and uncertainty, despite the natural tendency to eliminate any identified risks. Rephrasing David’s quote to today’s crypto markets, we can say:
“The mistake is thinking that there is an antidote to market volatility”
Crypto Markets Ahead
- Cardano Catalyst, a $1 billion innovation fund, is accepting proposals from crypto entrepreneurs and business owners. In case you missed it, COTI is the first native project on Cardano’s Catalyst — learn more here!
- Preliminary numbers show that DEX’s processed $100 billion in volume for November 2021
- Vitalik Buterin has proposed a solution that will tackle Ethereum’s high gas fees