For the last several months, the volatility of bitcoin appears to have calmed down somewhat. The world’s number one digital currency by market cap has, to one degree or another, been hovering around the $20K mark for some time, and while there are little moments here and there when it goes up or down, the range appears to be relatively consistent.
Bitcoin Volatility Has Remained Relatively Still
With all this in mind, it appears bitcoin trading has become rather “boring” as of late. This is the word some analysts have used to describe bitcoin and its present state of being, and some argue this isn’t necessarily a bad thing.
The idea that bitcoin’s volatility is dying down somewhat suggests, according to several industry heads, that the asset has finally bottomed out. What has been an extremely rocky year for the leader of digital assets could finally be heading towards some steadiness. Vijay Ayyar – an executive with the digital currency exchange Luno – commented in a recent interview:
Bitcoin has essentially been range bound between $18-25K for four months now, which indicates consolidation and a potential bottoming out pattern given we are seeing the dollar index top out as well. In previous cases, such as in 2015, we’ve seen BTC bottom when DXY has topped, so we could be seeing a very similar pattern play out here… Bitcoin being stuck in such a range does make it boring, but this is also when retail loses interest and smart money starts to accumulate.
Matteo Dante Perruccio of Wave Financial also threw his two cents into the mix, mentioning:
We’ll have seen a lot more failures in the defi [decentralized finance] space, a lot of the smaller players, which is absolutely necessary for the industry to evolve.
Discussing the dying volatility, financial giant Goldman Sachs commented that some of the patterns we’re now beginning to see occurred in late 2018 after the crypto arena had, at that point, experienced its heaviest bear market to date. The company wrote in a statement:
Low volatility [in Nov. 2018] was following a large bitcoin bear market.
Is an Uptick Coming?
Further commentary came from James Butterfill, head of research at crypto asset management firm Coin Shares. He stated:
We err on the side of greater potential for upside rather than further price falls. The largest fund outflows recently have been in short bitcoin positions (US $15m this month, ten percent of AuM), while we have seen small, but uninterrupted inflows into long bitcoin over the last six weeks. Clients are telling us that once the Fed pivots, or is close to it, they will begin adding positions to bitcoin. The recent liquidations of net shorts are in sync with what we are seeing from a fund flows perspective and implies short sellers are beginning to capitulate.