Bitcoin Volatility Takes a Sharp 61% Drop in the Last 2 Months
- Bitcoin stuck around $10,200 as volatility collapses
- “Clearly, BTC is consolidating”
Bitcoin is stuck in a tight range as the price has gone boring and stable at just around $10,000.
Trading volume, though still low at $535 million, has recovered from around $350 million during the weekend.
As Bitcoin trades sideways, the volatility has collapsed.
The 30-day Bitcoin volatility hit a reading of 2.62% on September 16, a level last seen in May.
On July 15, BTC/USD volatility reached 6.71% but since then we have taken a drop of a whopping 61% as BTC price fails to show any action.
Tim Enneking, managing director of Digital Capital Management said,
“Clearly, BTC is consolidating.”
“Interestingly, it has been consolidating recently in the upper half of the ever-narrowing pennant it's been stuck in since the early June 2019 peak. This is the first time that's happened in over three months,”
Volatility has its significance as it states how risky is to hold an asset. The more volatile an asset, the more people want to limit their exposure to it. It also increases the cost of hedging, so if the volatility of the leading cryptocurrency decreases, the cost of converting into and out of Bitcoin will reduce as well.
The lowest BTC volatility was hit in October 2016 at just 0.82% while the highest was in June 2011 at 16.11%.
Clearly, Bitcoin has gone a long way in these last 8 years.
In comparison to traditional assets, it is still high as the volatility of gold averages around 1.2% while major fiat currencies average between 0.5% and 1.0%.
“Hype has absolutely died down around Bitcoin,”
said Erik Finman, a cryptocurrency entrepreneur who gained millionaire status at a young age by investing in Bitcoin.
While Joe DiPasquale, CEO of cryptocurrency hedge fund manager BitBull Capital told Forbes,
“Investors are still in a wait-and-see, although we expect this to change around events, and the volatility to increase as those events affect.”
With Bakkt launching its physically delivered daily and monthly Bitcoin futures has the market excited and expecting a big move and resulting in heightened volatility at the end of the week.