Key points: 

• The accompanying one-month Bitcoin average realized volatility distribution chart includes a description of Bitcoin being "deeply in a bear market."
• The data shows that volatility falls at the same point in every four-year halving cycle, so 2022 fits perfectly with the trend of volatility falling more sharply in each bear market year.
• Ecoinometrics noted that volatility is not yet at historically low levels when compared to data from recent sources such as the Bitcoin Historical Volatility Index (BVOL).
• Analysts are eyeing a possible cat-and-mouse game between BTC/USD and gold as TradFi trading volumes return on Jan. 3.

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Bitcoin volatility is on track to drop, but Bitcoin’s price action could still “catch up” to gold this year.

The latest data and analysis show that despite Bitcoin’s sideways moves, the largest cryptocurrency is performing as expected.

BTC price volatility follows a bearish pattern

Volatility will be closely watched in early 2023 as traders become frustrated with the lack of tangible movement in BTC/USD.

However, for the analysis resource Ecoinometrics, there is no need to worry - Bitcoin will become more stable over time, and this is a feature, not a bug.

“Patterns of extreme volatility events confirmed so far as Bitcoin matures,” stated in a Jan. 2 Twitter comment.

The accompanying one-month Bitcoin average realized volatility distribution chart includes a description of Bitcoin being "deeply in a bear market."

The data shows that volatility falls at the same point in every four-year halving cycle, so 2022 fits perfectly with the trend of volatility falling more sharply in each bear market year.

Bitcoin average 1M realized volatility distribution chart. Source - Ecoinometrics [Twitter]

However, Ecoinometrics noted that volatility is not yet at historically low levels when compared to data from recent sources such as the Bitcoin Historical Volatility Index (BVOL).

Bitcoin historical volatility index 1W chart. Source - TradingView

Bitcoin is poised to follow stocks and gold 

Investors may not have to look for triggers that could upend the volatility status quo.

Analysts are eyeing a possible cat-and-mouse game between BTC/USD and gold as TradFi trading volumes return on Jan. 3.

“I think 2023 will be the best year for precious metals, will bitcoin catch up?” polled popular Twitter account Tedtalksmacro this week.

A comparison of the two assets shows the impact of the November FTX crash on Bitcoin, while gold has experienced a relative revival. Until then, the two were in lockstep, according to TradingView.

BTC/USD vs. XAU/USD 1D chart. Source - TradingView

Stocks could also be quicker to boost BTC price action as U.S. futures traded higher ahead of the first Wall Street meeting of the year, replicating the 1-2% gains seen in Europe the day before.

Michaël van de Poppe, founder and CEO of trading firm Eight, predicted at the time: “Bitcoin looks like it’s ready for a sequel, but it’s always hard to see when the US opens up tomorrow.”

“I’d be chasing the $16,6K area if you’re not in a position. Targets; $17-17,1K.”

BTC/USD annotated chart. Source - Michaël van de Poppe [Twitter]