The top cryptocurrency, Bitcoin (BTC), is stuck in a slow drift between $110,000 and $120,000 as its volatility decline continues.

The market has virtually lost momentum, and price movement is still slow. Late Wednesday, Bitcoin's 30-day implied volatility fell to an annualized 36.5%, the lowest level since October 2023, when the cryptocurrency was trading below $30,000, according to Volmex's BVIV index. The data, which comes from TradingView, shows how much volatility has decreased in spite of Bitcoin's enormous nominal value increase.

Even while U.S. economic indicators suggest that the possibility of stagflation is increasing, a recent multi-year low in the implied volatility of Bitcoin indicates that options traders are notably lacking in urgency.

The demand for options, which are financial tools frequently used to hedge exposure or profit from abrupt price fluctuations, is still low despite macroeconomic worries. One of the main causes of implied volatility's ongoing decline is this sluggish activity.

The story of stocks is similar. Known as Wall Street's "fear gauge," the VIX temporarily surged from 17 to 21 on Friday before falling back. According to the index, which measures the S&P 500's 30-day implied volatility, even stock traders appear to be reducing their defensive stances.

In the case of Bitcoin, the implied volatility has been declining for several months, which is in opposition to the asset's rising price. Bitcoin has increased from $70,000 to well over $110,000 since November, yet volatility has subtly deteriorated in the backdrop.

This decoupling is a significant divergence from Bitcoin's past actions. Historically, volatility increased in tandem with significant market fluctuations, irrespective of their direction, intensifying both bull runs and breakdowns. Now that the price is rising and the volatility is decreasing, the market might be moving into a new stage that will be influenced more by structural changes in the way Bitcoin is being traded and seen than by speculative mania.

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