Bitcoin (BTC) has settled into a period of low volatility, but this calm may be temporary. Derive, an on-chain crypto options platform, suggests that a storm of price swings could be on the horizon as volatility indicators reach near-monthly lows.

BTC Consolidation Signals Imminent Volatility

Since March 12, BTC has been trading between $80K and $85K, following a sharp drop from its $100K peak. The decline was triggered by Trump’s new tariffs and disappointment over a lack of U.S. government BTC purchases.

With BTC now consolidating, volatility metrics have plunged. Weekly at-the-money (ATM) volatility has dropped to 49%, nearing monthly lows of 45%. Realized volatility has also declined from 91% to 54%, according to Nick Forster, founder of Derive.

Why Volatility Could Return Soon

Volatility is mean-reverting, meaning that after periods of low movement, a surge is often expected. Forster predicts a return to volatility levels last seen in February (60-70%).

This doesn’t indicate whether BTC will rise or fall—only that big price swings in either direction are increasingly likely. Several key factors could trigger this shift:

• Geopolitical events like a ceasefire (or continued conflict) in Ukraine
• Crypto regulations under the Trump administration
• Federal Reserve policy shifts

How the Fed’s Next Move Could Impact BTC

The U.S. Federal Reserve’s upcoming interest rate decision is another major catalyst. Markets expect the Fed to hold rates steady, but traders are pricing in two to three rate cuts later this year.

A dovish surprise could reignite BTC’s bullish momentum, sending prices higher. However, BlackRock warns that inflation concerns might limit how much the Fed can cut rates, potentially dampening BTC’s upside potential.

Brace for a Wild Ride

If equity markets continue to slide, BTC could follow suit, accelerating its decline. On the other hand, if macroeconomic conditions improve, Bitcoin could see a sharp rally.

For now, traders should prepare for increased price swings, as the current low-volatility phase is unlikely to last much longer.