‘Volatility drops below 40, and the market is as still as dead water? Don't rush, the calmer it is before the storm, the more deadly the explosion!’
Dasheng's interpretation:
Dasheng sees the recent market as really 'summer fatigue' meeting 'Buddha-like indifference', the entire crypto space seems to be drained! BTC's short-term implied volatility (IV) has dropped below 40%. What does this mean? Simply put, the seasoned players in the options market generally feel that Bitcoin won't bounce much in the coming period. Big rises and falls? Unlikely!
Why so 'bleak'?
The seasonal curse has returned: Every summer (June to August), the big institutions and fund managers in Europe and America love to gather for vacations! When the main funds withdraw, market liquidity deflates like a punctured ball, and trading volume visibly drops. Big institutions are on vacation, and retail investors are left to perform a solo act? How boring!
News is 'in transition': Recently, there really haven't been any explosive news to stimulate the market. Fed rate hikes? Uncertain! Major ETF approvals? No sign! Industry explosively upgraded? Wait and see… Without stories to tell, the market is like a headless fly, moving sideways!
Emotions lying flat and giving up: Everyone sees this stagnant situation and simply 'plays dead'. Buy? Afraid of catching falling knives. Sell? Reluctant to cut losses. Everyone is waiting for a game-changing 'bomb' to break the deadlock!
Dasheng's bitter experience:
1: Remember last July? The IV was crashing hard, and BTC was hovering around $53,000 for nearly two months, making people want to smash their keyboards! What happened in the end? At the end of August, it plunged down and then shot back up, the volatility doubled instantly! This trend feels too familiar!
2: Looking at the options market now, those selling options might be secretly happy because the market is stagnant, and they earn premiums without lifting a finger.
Dasheng needs to pour a bucket of cold water: Low volatility is a sugar-coated bomb! If a black swan suddenly appears, like a major exchange blowing up or a country launching sudden regulations, those selling insurance might end up with nothing left! Remember before the LUNA crash, IV was also very 'calm'...
Dasheng's view: In the short term, this 'dead cat bounce' will need some time to play out. For us ordinary players:
Contract traders and short-term players: Take a break! Playing contracts in narrow fluctuations will drain you dry with fees. Breakouts are mostly false signals, don’t get itchy fingers and give away your head!
Spot traders and DCA enthusiasts: Your spring is here! It won’t drop much further, just right for picking up cheap chips in batches. Stay calm, don’t let your faith get worn down!
The ambush team: Keep your eyes wide open! Low volatility + low liquidity = a single spark can ignite a prairie fire! Pay close attention to news, especially macro data (inflation, employment), regulatory dynamics, and actions from major institutions.
The longer the sideways movement, the more explosive the breakout! Right now, the market is like a tightly compressed spring. Do you guess the next move will be a firecracker or a landmine? Follow Dasheng and keep an eye on these three major signals. Don't wait for the market to start before you regret it!
