Volatility Go Down​

Issue #6 – May 30, 2022 

Volatility Go Down. 

A play on the fabled Bitcoin mantra, Number Go Up, we believe that Volatility Go Down may become a new battle cry for Bitcoin investors. 

Declining BTC volatility is an earned quality, indicative of improving fundamentals, such as growing adoption & decreasing coin supply discussed below. Given volatility is a proxy for degree of price certainty, we are not surprised to see improved performance of Bitcoin relative to US equities in the aftermath of the UST collapse. See last table in today’s publication and the May 23rd Bulletin for more. 

These on-chain metrics arise from different qualities in the Bitcoin and Ethereum (not shown) protocols absent in traditional, fiat-bound assets such as equities and bonds. This comparison is core to our investment thesis laid out in the April 25th Digital Asset Bulletin.


Volatility tends to trend lower as coin supply steadily decreases.  

  • The Bitcoin protocol’s disinflation is viewed as one of the key features that provides integrity and trust, contributing to its network growth and adoption.  

In comparison to traditional assets such as S&P500, Nasdaq and US Treasury yields, which are exhibiting above average or increasing volatility, digital asset volatility is below average. 

As noted above, we ascribe the reason for lower volatility in these protocols to the integrity of the Networks, and in the case of Ethereum, for the promise of its additional features (ETH 2.0, ZK Rollups, sharding).


Source: 3iQ Research. Data sourced from Messari as of May 26, 2022. Bitcoin price change % is in USD.  

When taking a closer look at recent BTC trading volume, we noted in last week’s bulletin that markets absorbed the elevated, but not historic volumes for BTC in light of the Luna UST collapse. 

Over the last five years, daily BTC Volume over 300,000 BTC has occurred 205 times, with average declines and increases of -6.24% and 6.78%, respectfully. Comparing this with something like the COVID “flash crash” back in March of 2020, recent daily volume has no historical significance, in our view.  

While volume garners great attention in liquid markets, for Bitcoin & Ethereum, it pales in comparison to the existing pending qualities of the networks. Extreme circumstances aside, such as Covid-19 related volume of 1.5 million BTC, we believe the improving integrity of the network renders volume, a less of reliable indicator trend reversal.


Quickly approaching is the 200-week moving average for BTC, which is sitting around $22,000 USD today. Since inception, this metric has been pointed north with velocity, and has acted as historical support even under times of extreme uncertainty.  

Interestingly, this long-dated moving average has been retested in past tail-end Bitcoin halving cycles (2015, 2019) and once again during the March 2020 crash. Given the current growth rate of the Bitcoin network, we believe this moving average will get re-tested if macro conditions continue to worsen. It is likely, in our view, that equities and other risk markets decline in this scenario.  

Digital Asset Universe


Dominance has again crept in favor of BTC since our last bulletin, with BTC at 47% and ETH at 19%.  

Source: 3iQ Research. Data sourced from Coin.Dance, Etherscan.io as of May 26, 2022. 

The alternative digital assets below posted greater losses than most other global assets, including BTC and ETH over the past week, building on YTD underperformance in part due to their size, usability, and lower relative participation than those of their peers: BTC and ETH. 


Source: 3iQ Research. Data sourced from Messari as of May 26, 2022. Figures expressed in USD unless otherwise stated. Past performance is not indicative of future results.


Source: 3iQ Research. Data sourced from Bloomberg as of May 26, 2022. Past performance is not indicative of future results.  

BTC and ETC strength relative to US equities continued last week as shown in the table below.


Source: 3iQ Research. Data sourced from Bloomberg as of May 26, 2022. You cannot invest directly in an index.  Past performance is not indicative of future results.

Research Team

Mark Connors

Mark Connors

Head of Research

Herbert Zhang, CFA

Herbert Zhang, CFA

Director and Portfolio Manager

Connor Loewen

Connor Loewen

Cryptocurrency Analyst

Contact us: research@3iq.ca

Important Disclosures:


These materials do not constitute an offer to sell or issue or the solicitation of an offer to buy or subscribe for securities in the United States or any other jurisdiction. Neither the 3iQ Corp.’s (the “Manager”) nor the Fund’s securities have been nor will be registered under the United States Securities Act of 1933, as amended (the “Securities Act”), nor under the applicable securities laws of any state or other jurisdiction of the United States, and may not be offered, sold, resold, transferred or delivered, directly or indirectly within, into or in the United States, absent registration or an applicable exemption from, or except in a transaction not subject to, the registration requirements of the Securities Act and in compliance with the securities laws of any relevant state or other jurisdiction of the United States. No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise.

The commentaries contained herein are provided as a general source of information based on information available as of May 19, 2022. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change investment decisions arising from the use or relevance on the information contained here. Investors are expected to obtain professional investment advice to determine suitability of their investment objectives and portfolio. 3iQ Corp. makes no representation or warranty to any investor regarding the legality of any investment, the income or tax consequences, or the suitability of an investment for such investor. Prospective investors must not rely on this document as part of any assessment of any potential investment and should not treat the contents of this document as advice relating to legal, taxation, financial or investment matters. Prospective investors are strongly advised to make their own inquiries and consult their own professional advisers as to the legal, tax, accounting and related matters concerning the acquisition, holding or disposal of an investment. All content is original and has been researched and produced by 3iQ Corp. unless otherwise sourced or stated therein.

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Certain statements in this document are forward-looking statements, including those identified by the expressions “anticipate”, “believe”, “plan”, “estimate”, “expect”, “intend”, “target”, “seek”, “will” and similar expressions to the extent they relate to the Fund and the Manager. Forward-looking statements are not historical facts but reflect the current expectations of the Fund and the Manager regarding future results or events. Such forward-looking statements reflect the Fund’s and the Manager’s current beliefs and are based on information currently available to them. Forward-looking statements are made with assumptions and involve significant risks and uncertainties. Although the forward-looking statements contained in this document are based upon assumptions that the Fund and the Manager believe to be reasonable, none of the Fund or the Manager can assure investors that actual results will be consistent with these forward-looking statements. As a result, readers are cautioned not to place undue reliance on these statements as a number of factors could cause actual results or events to differ materially from current expectation.  Some of these risks, uncertainties and other factors are described in the offering documents for the relevant Funds under the heading “Risk Factors”. These factors – many of which are beyond the Manager’s control and the effects of which can be difficult to predict – include: no assurance in achieving investment objectives, loss of investment, volatility and fluctuation in value of cryptoassets, concentration risk, reliance on the Manager, no ownership interest in the cryptoasset portfolio, changes in legislation, conflicts of interest, valuation, significant redemptions, limited liquidity in the units, limited operating history, exchange rate risk, liquidity constraints on cryptoasset markets, tax risk, risks associated with blockchain networks and forks, risks associated with digital asset platforms and cybersecurity. The forward-looking statements contained herein were prepared for the purpose of providing prospective investors with general educational background information about cryptoassets and the Funds and may not be appropriate for other purposes. None of the Fund or the Manager assumes any obligation to update or revise them to reflect new events or circumstances, except as required by law.

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About 3iQ Corp.

Founded in 2012, 3iQ is Canada’s largest digital asset investment fund manager with more than C$2.5 billion in assets under management. 3iQ offers investors convenient and familiar investment products to gain exposure to digital assets. For more information about 3iQ and its digital asset investment funds, visit www.3iQ.ca or follow us on Twitter @3iQ_corp.

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Fred Pye

Frederick T. Pye


Frederick T. Pye is the Chairman, Chief Executive Officer and Director of 3iQ Corp. He is also the Chairman and Director of 3iQ Digital Holdings Inc. Mr. Pye is recognized for creating and promoting creative and unique investment products for the investment industry.

Mr. Pye has managed private client portfolios with Landry Investment Management and various other investment dealers. Prior to this Mr. Pye was Founder, President & Chief Executive Officer of Argentum Management and Research Corporation, a company dedicated to managing and distributing quantitative investment portfolios including the first long-short mutual fund in Canada.

He was also Senior Vice-President and National Sales Manager of Fidelity Investments Canada and an integral part of the team that saw assets rise from $80 million to over $7.5 billion in assets under management during his tenure. He also held various positions with Guardian Trust Company, which listed the first Gold, Silver and Platinum Certificates on the Montreal Exchange.

Mr. Pye obtained a Masters in Business Administration from Concordia University.