June 6 (Reuters) – It’s a tense time for bitcoin investors. Watch. Wait. Don’t make the first move.

The capricious cryptocurrency’s been uncommonly quiet over the past four weeks, bound in the range of $28,452 and $25,800. Even the end of the U.S. debt ceiling saga did little to whet risk appetite.

Bitcoin’s volatility index is near 64, well below the 2023 peak of 116.5 touched in January, according to CryptoCompare. Overall daily cryptocurrency spot trading volumes – above $20 billion for most of the year – have languished at around $10.6-$12 billion in the last two weeks, data from The Block shows.

The data signals a reluctance of investors and traders to take positions in either spot or derivatives, said Noelle Acheson, an economist who has tracked the crypto sector for seven years.

This was echoed by Matthew Weller, global head of research at financial services group StoneX. “Looking at bitcoin’s chart, traders are waiting for a definitive break away from the $27,000 level that has magnetically pulled prices back consistently,” he said.

The world’s biggest cryptocurrency is still the best-performing asset of 2023, with gains of about 62%. Yet it has slid nearly 14% from a peak of $31,035 in April, keeping nervy traders guessing about its next move.

STILL WATERS RUN DEEP?

“The lack of anything interesting is also interesting,” said Luuk Strijers, chief commercial officer at derivatives exchange Deribit.

Bitcoin’s 7-day and 30-day implied volatility – options traders’ expectation of future price turbulence – have slid to January lows of under 40%, after peaking at 76% and 67% in March, according to The Block.

“If implied volatility falls to rock-bottom levels, it can’t go much lower,” Strijers added. “Trading volatility, buying options in the absence of a price move, that’s what people might do in this market.”

Market positioning indicates the maximum pain level for the June 2023 options expiry for bitcoin is at around $24,000, which could act as a support or resistance level, according to analysts at Bitfinex.

“Traders should be prepared for potential market turbulence and short-term price fluctuations in the second half of the month,” they said.

Longer term, in 2024, they expect bitcoin’s halving – a technical adjustment that reduces the rate at which new coins are created – and the U.S. elections to ratchet up volatility.

THE BULLS ARE HIDING

Funding rates, which measure the cost of holding bitcoin via futures, have edged lower, indicating investors are less willing to pay to be long. It was last trading at 0.0098%, way below the 0.0302% seen in March.

“A bull market is easy, when everything is going up,” said Thomas Kralow, a crypto hedge fund manager at Kralow Capital. “But it’s markets like these where people lose money – because of false beliefs that we are finally turning the corner, which is incredibly hard to predict.”

He added: “Right now with the drop in volatility, we have a few trades that we are open to hedge in case bitcoin drops down to $20,000.”

Reporting by Medha Singh and Lisa Pauline Mattackal in Bengaluru; Editing by Pravin Char

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