"Hey bitcoin, Do Something!"
The viral meme — starring a stick figure poking the ground and depicting a need for reaction — might just sum up the current scene at digital assets trading desks during the slow, early summer days.
Sure, bitcoin
BTC$105,434.25 just hit new fresh highs and is still trading above $100,000, but the P&L is diminishing daily for short-term volatility chasers.
"Bitcoin’s volatility has continued to trend lower, both in realized and implied measures, even as the asset reaches new all-time highs. This decline in volatility is particularly notable amid historically high price levels," said NYDIG Research in a recent note shared with CoinDesk.
Bitcoin's implied volatility trending lower. (NYDIG Research)
And despite macro and geopolitical headwinds hitting traditional assets hard, bitcoin has gone into a chill summer vibe.
Bitcoin's realized volatility is also declining. (NYDIG Research)
"With the market now entering the typically quieter summer months, this downtrend may well persist in the near term," NYDIG added.
Of course, this is perhaps a positive trend for bitcoin as it depicts a more maturing market and potentially speaks to its original promise of "store of value," as the price reaches fresh new highs.
However, traders love volatility, as the greater the movement, the bigger the P&L opportunities are. While fresh record highs might be great for long-term HODLers, for short-term traders, those juicy breakouts are getting hard to make money on.
Why the calm?
So what's driving these calm price actions?
NYDIG is chalking it up to increased demand from bitcoin treasury companies, which seem to be popping up everywhere, and a rise in sophisticated trading strategies, such as options overwriting, as well as other forms of volatility selling.
The market is getting more professional, and unless we see some true Black Swan events (FTX, anyone?) for crypto, prices will continue to remain calm.
The opportunity
But all is not lost — there are always opportunities to make money even when it's not as lucrative as it seems.
"The decline in volatility has made both upside exposure through calls and downside protection via puts relatively inexpensive," said NYDIG.
Translation: Hedging and catalyst-driven plays are where the money might be in this market. If one thinks something big is coming, this is perhaps the time to position with directional bets. And there are a few big ones coming.
"For traders anticipating market-moving catalysts, such as the SEC’s decision on the GDLC conversion (July 2), the conclusion of the 90-day tariff suspension (July 8), or the Crypto Working Group’s findings deadline (July 22), this presents a cost-effective opportunity to position for directional moves," said NYDIG.
So bitcoin's summer lull might not be a total dead zone; rather, it's a setup for those who are willing to play the patience game and hedge accordingly to trade potential market-moving events.
