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Data shows that Bitcoin 7-day volatility has come to life over the past week as the collapse of crypto exchange FTX shook up the market.
Bitcoin 7-Day Volatility Has Risen to Values Above 7%
This is according to the latest weekly report of Secret investigationcurrent 7-day volatility levels are the second highest this year.
The “inconstancyis an indicator that tracks the average daily return in Bitcoin’s price over a period of time.
While this length of time can be of any length, the “7-day” and “30-day” versions of the statistic are the most natural.
A notable feature of the volatility indicator is that it only measures returns using each day’s closing prices. This means that any intraday market movements will not be accounted for by the metric, so as long as the price returns to normal by the end of the day.
When the volatility has a high value, it means that the price of the crypto has been fluctuating a lot lately. On the other hand, low readings suggest that the BTC market is showing stale activity.
Now, here is a chart showing the trend in Bitcoin 7-day and 30-day volatility over the past year:
Looks like the values of the metrics have spiked up in recent days | Source: Arcane Research's Ahead of the Curve - November 15
As you can see in the chart above, both the 7-day and 30-day versions of Bitcoin volatility have seen a surge recently.
Prior to this rise, the indicator had very low readings for about a month, with the 7-day version in particular hitting historic lows of 1%.
The collapse of FTX and the resulting market crash is the cause of the crypto’s sudden turn to volatile nature during the past week.
7-day volatility has risen above 7%, reaching levels just behind the June annual high, when 3AC went bankrupt.
Historically, Bitcoin has calmed down after major spikes in volatility as it is now being observed.
However, the report notes that the current market environment is filled with contagion-related uncertainty and abnormal positioning in derivatives, so the market is likely to remain volatile in the coming days.
At the time of writing, Bitcoin’s price is hovering around $16.7k, down 5% over the past week. Over the past month, the crypto has lost 12% in value.
The chart below shows the trend in the price of BTC over the past five days.
The value of the crypto seems to still be consolidating around $16.7k | Source: BTCUSD on TradingView
Featured image from Jievani Weerasinghe on Unsplash.com, charts from TradingView.com, Arcane Research