Crypto News

Brace for Impact: Bitcoin’s Calm Before the Volatility Storm, Experts Warn

March 20, 2025
Smart Money

Bitcoin Faces Potential Price Turbulence Amid Low Volatility, Says Derive’s Nick Forster

March 18, 2025 – 7:46 a.m. UTC

In the world of cryptocurrency, stability can often be a precursor to upheaval. This notion is presently echoed in the market dynamics of Bitcoin (BTC), which has shown a period of low volatility that experts warn may soon give way to significant price fluctuations. According to insights shared by Nick Forster, founder of the decentralized crypto on-chain options platform Derive, the current calm in Bitcoin’s trading could be short-lived, preparing the stage for a potential storm.

Current Market Situation

Since March 12, Bitcoin has stabilized within the $80,000 to $85,000 range. This consolidation phase typically follows a substantial directional move, which in Bitcoin’s case was a decrease from $100,000 to under $80,000 in the weeks prior. Market analysts have attributed this drop to a variety of factors, including President Donald Trump’s recently imposed tariffs and disappointment over the stagnation of new U.S. purchases for the strategic Bitcoin reserve.

Metrics Point to Declining Volatility

As Bitcoin continues to trade within this range, key volatility metrics have also shown a marked decrease. Forster pointed out that Bitcoin’s weekly at-the-money (ATM) volatility has recently dipped below 50%, currently sitting at 49%, with the monthly lows falling to 45%. Realized volatility has likewise contracted, dropping from 91% at the beginning of March to 54% today.

"Forster emphasized that volatility is mean-reverting, meaning that current low levels could soon lead to a resurgence," he explained in a note shared with CoinDesk. "We can expect volatility to rise soon, likely returning to the levels we observed in February, which were between 60% and 70%."

Volatility remains price agnostic, indicating that while increased volatility may signal potential price movements, it does not inherently predict whether those movements will be upward or downward.

Triggers for Increased Volatility

Several factors could act as catalysts for this anticipated volatility. Among them are geopolitical events such as a ceasefire—or lack thereof—in Ukraine, as well as major shifts in crypto regulation under the Trump administration. Furthermore, the upcoming Federal Reserve rate decision could also have significant implications for market movement.

Market observers expect the Federal Reserve to maintain its current interest rates, although there is speculation surrounding potential rate cuts later in the year. BlackRock, a well-known investment management corporation, commented that markets are currently pricing in about two to three potential rate cuts of 25 basis points each. They noted, however, that despite fears of a U.S. recession, economic indicators do not necessarily support such a downturn, suggesting that persistent inflation may limit the extent of any cuts.

Market Implications

As Bitcoin’s signals indicate a potential increase in volatility, the relationship between the crypto market and equity markets could also play a crucial role. Should stock markets face further declines, this might accelerate downward movements in cryptocurrency prices.

As the market landscape evolves, traders and investors will be closely monitoring these developments, particularly as the interplay between regulatory environments and economic factors continues to shape the future of cryptocurrency trading.

About the Author

Omkar Godbole is a Co-Managing Editor on CoinDesk’s Markets team based in Mumbai. With a master’s degree in Finance and as a Chartered Market Technician (CMT) member, Godbole brings extensive expertise in market analysis. He has previously contributed to FXStreet and has worked as a fundamental analyst in currency and commodities brokerage. His personal holdings include small amounts of Bitcoin, Ethereum, BitTorrent, Tron, and Polkadot.