According to a report by Arcane Research, although some uncertainty remains, the overall market appears to be stabilizing. All eyes are on DCG’s next move in its debt collection campaign against users of its Gemini Earn product, which could further exacerbate the downward price move. If DCG enters bankruptcy proceedings, it may be forced to liquidate its assets (such as selling GBTC, ETHE, etc. positions), and Reg M may be launched, allowing traders to redeem Grayscale Trust shares at net asset value.
Reg M will lead to a massive arbitrage strategy of selling crypto spot instead of buying Grayscale Trust shares. If this happens, the crypto market could fall even further. However, in the long run, the market will eventually eliminate this effect and gradually become a potential market bottom event. Additionally, the data indicated that BTC’s seven-day volatility fell to 0.7%, its lowest point in two and a half years.
The 30-day volatility has followed a similar trend and is currently hovering around 1.4%, matching levels briefly touched before FTX crashed in early November last year. In fact, since February 2019, the number has fallen only seven times. These periods of low volatility rarely last for long, Arcane said. As a result, periods of volatility compression are often followed by wild swings, even in market downturns.