When global markets are focused on external threats, such as pandemics : volatility as a whole is reduced, due to consolidation of in-group sentiment. When global markets are focused on internal threats, the actions of market participants : volatility as a whole is increased.
Just as how bullying and adulation in societies coalesces around specific groups and individuals due to perceived weakness or strengths, contrarians also swarm around asset classes perceived to have abnormal fundamentals. ( Here, fundamentals refer to structure including, to a limited degree, trending sentiments a.k.a. momentum, from positive feedback loops. )
At the present moment, cryptocurrencies are by far the asset class with the lowest reliability of structure, and are thus fundamentaly deprivileged. Perhaps that is why, they are undergoing heightened volatility, as volatility ekes out of equities, metals, oil, and bonds. Under this hypothesis, cryptocurrency volatility will reduce whenever those other asset classes lose momentum.
Equities will lose upward momentum, if the funding cycle phases down.
Metals will lose upward momentum, if interest rates rise, and if geopolitical concerns encalm.
Oil will lose downward momentum, if the business cycle phases up, and if geopolitical concerns ratchet up.
Bonds will lose downward momentum, if the business cycle picks up, and if political turmoil within nationstates reduces somewhat from its presently chatty norm.
Just thinking aloud over tea, after breakfast. I have not analysed these thoughts in detail.
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