Bitcoin

Bitcoin recent stability might not last long, as on-chain data suggests a surge in volatility is imminent. According to crypto options platform Derive, BTC’s low volatility phase is nearing an end, setting the stage for major price swings—up or down.

Bitcoin’s Volatility at Record Lows

Since March 12, Bitcoin has been trading between $80K and $85K, following a sharp drop from its $100K all-time high. The decline was driven by Trump’s new tariffs and disappointment over the U.S. strategic BTC reserve’s inactivity.

Key volatility indicators are now near monthly lows:

• Weekly at-the-money (ATM) volatility has dropped to 49%, nearing the 45% low.
• Realized volatility has plummeted from 91% to 54% since the start of March.

However, volatility is mean-reverting, meaning this calm phase could soon give way to rapid price movements.

What Could Trigger Bitcoin’s Next Move?

Several macroeconomic and geopolitical factors could fuel BTC’s next volatility surge, including:

• A ceasefire (or lack of one) in Ukraine.
• Regulatory shifts under Trump’s administration.
• The U.S. Federal Reserve’s rate decision on Wednesday.

If the Fed signals rate cuts, Bitcoin could rally as liquidity expectations shift. However, BlackRock warns that rate cuts may be limited due to persistent inflation.

Bitcoin’s fate is also tied to traditional markets. If equities continue to slide, crypto prices could follow. A worsening economic outlook could accelerate BTC’s decline, reinforcing its recent correlation with risk assets.

Brace for a Market Shake-Up

Derive’s analysis suggests Bitcoin’s volatility will soon spike to February’s 60-70% range. While the direction remains uncertain, traders should prepare for sharp price moves in either direction.

Whether BTC breaks out or tumbles further, the next few weeks could bring high-stakes market action.

The crypto market is in turmoil as Bitcoin price plunges below $80,000, erasing $1 trillion in value within a month. The sell-off comes amid broader economic fears, with traders grappling with inflation concerns, Federal Reserve policies, and uncertainties surrounding the 2024 U.S. presidential election.

Despite previous bullish sentiment, recent market trends indicate a shift toward caution. Investors are now questioning whether Bitcoin’s meteoric rise is sustainable in the face of mounting macroeconomic risks.

BlackRock CEO Sounds Inflation Alarm

Larry Fink, CEO of BlackRock, the world’s largest asset manager, has warned that increasing nationalism—particularly under a potential second Donald Trump presidency—could fuel inflation. Speaking at the CeraWeek conference, Fink cautioned that trade policies under Trump 2.0 may stoke price hikes, reducing hopes for Federal Reserve rate cuts in 2025.

With inflation persisting, the Fed remains hesitant to lower interest rates. Fed Chair Jerome Powell recently reaffirmed a cautious stance, suggesting no immediate rate cuts despite market expectations. This uncertainty has left crypto traders in limbo, as interest rate decisions significantly impact risk assets like Bitcoin.

Recession Fears Weigh on Crypto Markets

Investment banks are raising their recession forecasts, further dampening investor sentiment. Goldman Sachs has increased the odds of a U.S. recession in the next 12 months from 15% to 20%, while Yardeni Research now sees a 35% chance of an economic downturn due to Trump’s aggressive policy agenda.

With economic slowdown fears rising, traditional markets have also suffered declines, contributing to crypto’s sharp downturn. The interconnectedness of global financial markets means Bitcoin and other cryptocurrencies are not immune to these broader macroeconomic shocks.

Crypto Traders Brace for More Volatility

As uncertainty looms, crypto traders are increasingly adopting hedging strategies to protect their portfolios. Sean Dawson, head of research at Derive.xyz, highlighted that traders are turning to downside protection amid heightened volatility across traditional and crypto markets.

Wednesday’s U.S. inflation report will be a key moment, as February’s consumer price index (CPI) data could further shape market expectations. If inflation remains stubbornly high, Bitcoin and the wider crypto market may face even greater pressure in the coming weeks.

The coming weeks will be pivotal for Bitcoin and the entire crypto ecosystem. With inflation fears, recession risks, and uncertainty around U.S. economic policies, traders must navigate a volatile landscape. Whether Bitcoin can regain its momentum or continues its downward trajectory will largely depend on macroeconomic developments and investor sentiment.

Bitcoin tumbled to a low of $80,226, sparking a broad sell-off across the crypto market. Leading altcoins also suffered significant losses, with investor sentiment hitting a multiyear low. The downturn has been fueled by macroeconomic concerns, including the potential imposition of tariffs by former President Trump, which has weighed heavily on risk assets.

Crypto Stocks Suffer Pre-Market Losses

The slump extended beyond digital assets, dragging down crypto-adjacent equities in pre-market trading.

• MicroStrategy (MSTR) and Coinbase (COIN) dropped over 5%.
• Leading bitcoin miners, including MARA Holdings (MARA), Riot Platforms (RIOT), Core Scientific (CORZ), and CleanSpark (CLSK), saw declines of at least 2.5%.
• Coinbase slipped below $205, adding to its woes after failing to secure a spot in the S&P 500.

Investor Sentiment Turns Bearish

The ongoing market weakness has pushed the Crypto Fear and Greed Index to 17, signaling “extreme fear”—its lowest level in years. This suggests that traders remain cautious, with many fearing further downside.

Outlook: Can Bitcoin Rebound?

While some analysts believe this correction is temporary, others warn that further declines could be on the horizon. Bitcoin’s ability to reclaim key support levels will be crucial in determining whether this dip is a buying opportunity or the start of a prolonged downtrend.