Bitcoin has been trading within a reasonably tight range, its volatility reaching the lowest point in more than four months today.
The digital currency’s 30-day volatility hit a reading of 47% today, the least since May 10, according to research from asset manager Blockforce Capital.
In addition, its 60-day volatility also declined to a reading of 54%, the lowest since May 10, additional figures from Blockforce Capital show.
The chart below helps show these developments:
For more than a month, bitcoin has been fluctuating mostly between $10,000 and $11,000, CoinDesk data reveals.
Several analysts weighed in on this situation, emphasizing that the digital currency is experiencing lackluster sentiment.
“Hype has absolutely died down around Bitcoin,” said Erik Finman, a cryptocurrency entrepreneur who attained millionaire status at a young age by investing in the world’s most prominent digital asset.
The cryptocurrency is in a “slump,” he stated.
“Volatility is some of the lowest we’ve seen in a long time,” emphasized Tim Enneking, managing director of Digital Capital Management.
“Clearly, BTC is consolidating,” he added.
“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.”
[Ed. note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
Joe DiPasquale, CEO of cryptocurrency hedge fund manager BitBull Capital, also weighed in.
“Generally, Bitcoin is still consolidating; we are now seeing tighter spreads, such as this weekend’s range between $10,175 and $10,435.”
In spite of this relatively tepid market movement, the digital currency could soon break free of its current range, he noted.
“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,” said DiPasquale.
“This Friday, Bakkt’s physically-custodied Bitcoin futures launch, and many investors are watching their adoption by institutions closely,” he noted.
Other analysts singled out different factors as likely causing the digital currency to experience heightened volatility.
“Real, ‘true-blue’ mainstream technology that uses Bitcoin” could pull the cryptocurrency out of its malaise, said Finman.
“There’s no mainstream killer use case for Bitcoin in developed countries right now. This is a major pain point, although not completely unique, it does seem to be necessary to repeat often.”
Enneking offered a different perspective, stating that:
“The most likely short-term factor that might cause a breakout to the upside are increasing macroeconomic and geopolitical concerns, most recently highlighted by the drone attacks on Saudi oil fields (although that did not have any immediate effect on the price of BTC).”
“A US ETF approval would also provide tremendous impetus, but it is unlikely we’ll see positive decisions out of the SEC next month, when the next deadlines expire,” he noted.
“Longer term, of course, the BTC halving in May should be quite positive and the run-up to that event (which is now almost painfully well known) will almost certainly begin well in advance of that date,” said Enneking.
“In general, confidence in the sector is increasing and that could provide a boost to crypto prices in general, especially for the “alts” which have really been hammered during the summer consolidation.”
Disclosure: I own some bitcoin, bitcoin cash and ether.