Bitcoin's recent price slump may have been preceded by a period of unusual calm. According to Swan Bitcoin's chief investment officer, Rapha Zagury, the two weeks leading up to June 7th saw Bitcoin's volatility drop to levels within the bottom 6% of its entire history.
This lack of significant price movement, measured by a 15-day rolling volatility metric, suggests Bitcoin became "stuck in a range" between May 24th and June 7th. During this period, the price fluctuated within a narrow band, ranging from $66, 936 to $71, 656.
The placid price movement came to an abrupt end on June 7th, with a sudden decline of 3. 33% that brought the price down to $69, 264. Analysts believe this drop may be linked to the release of the United States Employment Situation Summary Report on the same day. The report indicated stronger than expected job growth, which could influence the Federal Reserve's decision on interest rates on June 11th. Bitcoin's price has been closely tied to Federal Reserve actions in recent times, with analysts looking to interest rate adjustments as a gauge for potential inflation control measures.
While the cause for the recent volatility remains under speculation, the exceptionally low volatility period preceding the dip has piqued the interest of investors. Historically, periods of low volatility in Bitcoin have been followed by significant price movements, either upwards or downwards. This has led some analysts to warn of potential upcoming price swings, though the direction remains uncertain.
Further complicating predictions is the ongoing debate within the investment community regarding Bitcoin's role as an inflation hedge. While some see Bitcoin as a safe haven during periods of rising inflation, others argue that it is increasingly correlated with traditional markets, making it susceptible to broader economic fluctuations.
The recent price movement and the preceding period of low volatility have reignited discussions about Bitcoin's long-term viability as a store of value. With the Federal Reserve meeting looming, the coming week could be crucial in determining the future trajectory of Bitcoin's price and volatility.