" (Bitcoin Volatility Is Still Compressing, Dimming Year-End Rally Outlook), the key points and analyses are as follows:
1. The decline in volatility reduces the likelihood of a rise:
* Declining Volatility Indicators: Bitcoin (BTC) volatility indicators continue to decline, reflecting the same trend in the S&P 500 index.
* Price Stability: This price stability indicates weak chances of a significant rally at the end of the year, according to analysts' analysis.
* Implied Volatility Contraction: The annual implied volatility index for Bitcoin over 30 days, measured by the BVIV index from Volmex, has dropped to 49%. This represents a significant decline after it had surged to 65% from 46% during the ten days ending on November 21.
* Meaning: Implied volatility is a measure based on options contracts that represents market expectations for price movements over a specified period. The decline from 65% to 49% indicates that the expected price disturbance over the next 30 days has decreased significantly.
2. "Matrixport's" Forecasts:
* Low Chances of a Rise: "Matrixport" sees that what is termed "volatility compression" indicates low chances of a rise by the end of the year.
* Their Expectations: The company stated in a market update that "implied volatility continues to contract, and with it, the likelihood of a significant bullish breakout before the end of the year diminishes."
* The Recent Catalyst: "Matrixport" added that the Federal Open Market Committee (FOMC) meeting represents the "last major catalyst," but once it concludes, "volatility is likely to decline further by the end of the year."
3. The Historical Relationship Between Price and Volatility:
* Traditional Positive Correlation: "Matrixport's" view aligns with the historically positive correlation between Bitcoin's price and its volatility (high volatility usually means significant price movements, which can be upward).
* Shift in Relationship: The article noted that this relationship has begun to gradually turn negative since November 2024.
* Compared to Wall Street: On Wall Street, implied volatility compression is often associated with a "bullish reset" in market sentiment.
In short, the analysis suggests that the decline in Bitcoin volatility and the expectation of more stability reduce the likelihood of a strong price surge before the end of the year.
