Analysis: Bitcoin Volatility Drops to Lowest Level Since 2016, Continued Leveraged Liquidation Reduces Liquidation Risk

BlockBeats News, July 22nd, Crypto Quant analyst Axel Adler Jr posted that Bitcoin has recently entered a low-volatility compression phase. The 1-week actual volatility 30-day average has dropped to 28.3, about a 31% decrease from the peak of 41.6 on June 25th, falling to around the 8th percentile of historical distribution since 2016, indicating that 92% of past trading days have seen higher volatility levels than the current level.

At the same time, Bitcoin's Open Interest (OI) relative to market cap has seen 30-day negative momentum for 21 consecutive days, indicating that market leverage is continually decreasing rather than building up in a low-volatility environment.

Although the current price has rebounded by around 11.4% from the June low, this has not been accompanied by an expansion of derivative positions, reducing the risk of a large-scale liquidation cascade.

However, Bitcoin is still below the 200-day moving average of $72,666. If the subsequent volatility rises back above 35 but the price fails to break above the long-term average, it may increase the downside risk.