One thing we know about markets is that prices tend to trend, while volatility mean reverts.
When volatility is really compressed—in other words, when prices are stuck in a tight range—it often precedes big moves in either direction.
That’s exactly what I’m seeing play out right now in crypto.
The chart below shows the total crypto market cap, excluding the top 10 largest coins. It captures what’s really happening outside the big tokens like Bitcoin, Ethereum, and Solana.
As you can see in the lower pane, volatility is at its lowest point all year.
Now the question is: which direction will that volatility expansion take?
I think the next major move is higher.
Zooming out, an upside move here would see these smaller tokens follow the path of Bitcoin and get back to the former highs. And from what I’ve been writing these past few weeks, I believe we’re still really early for these moves to take place.
Most of the crypto ecosystem hasn’t even started to move.
Everything else is just sitting sideways, watching Bitcoin and Ethereum hit all-time highs from the sidelines.
