The cryptocurrency market seems to be holding its breath as Bitcoin (BTC) remains stubbornly fixed at $70,000. This follows a volatile March, with many financial hubs around the world closed for the Easter weekend.
Available market data paints a picture of a market on pause. Both Bitcoin and Ethereum (ETH) have experienced minimal price swings. Bitcoin is clinging to the $70,000 mark, while Ethereum trades near $3,600. Even a basket representing the top 20 most liquid cryptocurrencies shows a modest gain of 1.9%, currently hovering around $2,750.
Volatility Simmers Beneath the Surface
This apparent calmness may be misleading. Analysts warn that while the past week saw a decrease in volatility compared to March’s average, with weekly realized volatility dipping below 50%, the future is uncertain. The looming Bitcoin halving event, expected around April 20th, is casting a long shadow. This event, which cuts the amount of Bitcoin rewarded to miners in half, has historically triggered increased market volatility. This is underscored by the elevated implied volatility of front-month options contracts, currently exceeding 75%. Implied volatility is a measure of expected price fluctuations.
Funding Rates Hint at Underlying Optimism
Further analysis reveals inflated funding rates across major exchanges for large-cap perpetual futures contracts. These rates typically indicate bullish sentiment, with most contracts recording positive funding rates between 6 and 8 basis points (bps). The global open interest for both Bitcoin and Ethereum perpetual futures also paints a bullish picture, reaching a combined total of $35 billion. While this suggests some underlying optimism in the market, it could also point towards a potential return to volatility.
Positive Inflows Fuel Bitcoin’s Pre-Holiday Rise
Meanwhile, a crypto research firm sheds light on a possible factor contributing to Bitcoin’s pre-holiday rise. According to a research note, Bitcoin saw a significant inflow into Bitcoin ETFs on March 27th, suggesting increased institutional interest. Data from another source further supports this trend, highlighting an additional inflow on March 28th.
The Takeaway: A Tense Calm
The crypto market appears content for now, but experts warn that this tranquility might be short-lived. The upcoming Bitcoin halving and underlying bullish sentiment could disrupt the current stability, potentially leading to a surge in volatility. As the clock ticks down to the halving, investors and traders will be closely watching for signs of a potential market breakout
This information is not legal advice. Do your own research before making any decisions. Only invest what you can afford to lose and seek independent financial advice if needed. Understand the risks involved before purchasing any cryptoasset