Bitcoin’s volatility continues to drop, showing that both bulls and bears are not taking large directional bets. Due to this low volatility, BTC has been stalling at $10k- $11k range for a couple of weeks now. Bitcoin’s 30-day volatility is now at 53.5%, which is its lowest since May 11, according to recent data.
While volatility has been dropping over the years indicating growing bitcoin adoption, this is not good news for traders. The top crypto slipped below $10k yesterday to trade at $9,900 before bouncing back. Even if the price is back above $10k, it remains well below last week’s high and is slowly losing momentum, risking a major breakdown. BTC is trading at $10,058.45 at press time with a 1.47% loss on the day.
Bitcoin’s stalemate has put a lot of downward pressure on the rest of the crypto market which continues to register losses. Most of the altcoins are in the red today, with a few top coins like litecoin, LEO, and Huobi Token (HT) seeing 0.35%, 0.8%, and 6.5% gains respectively.
Volatility Is At A Four-Month Low
Volatility is a double-edged sword. A more volatile market makes gains more likely. A lack of volatility, on the hand, poses less opportunity to make huge profits from trading bitcoin. Bitcoin’s volatility has been on firm retreat. This has been accompanied by price stagnation. Bitcoin was stuck in a tight range last month, trading at the $10,000- $11,000 zone.
This low activity has also spilled over to September as Blockforce Capital, asset management firm, suggested that the king coin’s volatility is now at a four-month low at 53.5%. The firm calculated the 30-day volatility by making use of data from different crypto exchanges. Even so, in the short-term, volatility could pick up after Bakkt launches its bitcoin futures as both the bulls and the bears battle it out causing the price to head in a committed direction.
Also, BTC’s dominance that had soared above 71% in the past week is now notably showing signs of cooling down. It currently stands at 69.4%, as per CoinGecko.
Despite This Stalemate, BTC’s Fundamentals Are Stronger Than Ever
Bitcoin’s hash rate has been on an uptrend for the last couple of months but has gained moment in recent weeks. As per data from Blockchain.com, bitcoin’s hash rate is now a few hairs away from 100 quintillion hashes per second. At press time, the figure stands at 97 quintillion hashes per second which is a new feat. This, according to permabull Max Keiser, is bullish for the digital asset and price is expected to follow.
Also, bitcoin has registered positive returns for each quarter this year. Market analytics firm, Skew stated that bitcoin’s returns in Q2 2019 were the highest in five years at 161.50%.
Analysts’ Opinion On This
With regard to bitcoin’s low volatility, analysts believe the asset is currently consolidating before a breakout. Joe DiPasquale, CEO of cryptocurrency hedge funds manager BitBull Capital, remained bullish saying, “this bodes well for future valuation”. Yet, he maintained that bitcoin will not pique the interest of new retail investors until this consolidation phase fades.
On the other hand, trader-cum-analyst Josh Rager said that a move back into the $9k zone and a possible break to $8k is likely unless buyers come in over the next couple of days. He noted:
Bitcoin price breaks through current support area on the daily and through the 20MA.
If buyers don’t step in the next couple days, we’ll see Bitcoin retest the previous support in the low $9Ks.
A break from there likely leads to $8k.”
Fellow analyst Nick Cote notes that this sideways trading action could continue until bitcoin undergoes block halving next year in May. He tweeted:
“Unpopular opinion: pre halving shakeout before ATH’s.”