In the beginning of this year the price of the first cryptocurrency had been relatively stable website Buy Bitcoin Worldwide even reported the lowest index 30-day volatility of BTC since July. What it means for Bitcoin this fall in volatility? Could this help increase adoption among sellers, or do the changes simply reflect the changing attitudes of traders?
Tired of bitcoin traders?
Whether you are an experienced bitminer or know about the digital asset only the course of popular media, you might not hear about its volatility. Large price fluctuations in one direction and then the other – the usual thing. Because of this, Bitcoin trade has become very profitable. If you know what to do.
Recently, however, volatility began to decline. According to the already remote tweet enthusiast Alec Sypsnys, fluctuations of Bitcoin prices over the years has decreased. According to him, the peak volatility of Bitcoin falls.
2013: 14 percent;
2016: 5 percent;
2017: 5 percent;
2019: 4 percent.
To judge BTC volatility is to judge the career of eight-year-old child in the NBA for growth. You just need to wait.
This is confirmed by the study of Buy Bitcoin Worldwide that was mentioned on Market Watch. The article contributes to the assumptions of experts, Elements of Digital Asset Management on the reasons for this decline in volatility.
For example, a portfolio Manager Elements Thejas Naval and Director of quantitative analysis Kevin Lu contend that it is premature to declare the adoption of Bitcoin as a means of savings. They also refuted the idea that the decline in volatility is due to the transparency and market efficiency. Instead, preference is given to a less inspiring version.
We are somewhat more skeptical. We believe that the market is just exhausted. Got bored.
It is quite logical. Many traders-fans probably fled the market after suffering losses due to the prolonged bear market. While those who traded BTC for sure still looking for opportunities to trade. A shortage of “stupid money” that shook the market, clearly prompted many to explore new markets.
Even important news almost do not affect the price of Bitcoin. This suggests that has less money, who are willing to enter the market and exit it on the background of short-term events. And we are talking about emotional trading decisions, which often take a non-professional market participants.
Can the low volatility of Bitcoin to promote adoption?
The volatility of Bitcoin has always been one of the main obstacles to acceptance by sellers. Any sellers or customers do not want to overpay or receive less for the goods when exchange rate changes even before the completion of transaction processing. Therefore, we can assume that the decrease of volatility should encourage sellers to accept the digital currency number one.
Is it really so? Possible. Many sellers and customers would really prefer to see a stable price of BTC before you can use the digital asset as a medium of exchange.
See also: How business can start accepting bitcoins? The full guide.
But do not forget that we are still seeing the early stages of this experiment with decentralized Finance. For the stability of prices, which is necessary for everyday use of bitcoin buyers and sellers, the market should be several orders of magnitude bigger than now. Volatility should fall due to the size of the niche, and not due to the fact that traders are simply going into other sectors for more profit.
Willing to make the trade have not gone away. As soon as the market Bitcoin will make a move one way or the other, will appear traders are ready to benefit from fluctuations. This will again create volatility and when the market will again be “exciting”, will come others who will want to try to buy and sell BTC.
So there kind of feedback, because the more people try to make money on the trade, the higher the volatility. The situation will continue as long as the market will not reach enormous proportions, in which traders practically do not influence the price. When – or rather if – that happens, the price of Bitcoin will be higher than today can imagine everything.
More analysis and forecasts can be found in our cryptodata.
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