Concern is growing within the Bitcoin analyst community of late, since its 30-day volatility measure has been dipping from a recent high of nearly 130% to a current low of 64%. BTC has earned a reputation for being the most volatile asset class in history, and for good reason, but its latest descent has confused analysts. Its current recording is the lowest value for the data point in eight weeks or since mid-June.
Source: BFC
The above chart, courtesy of Blockforce Capital and Digital Asset Data, overlays these volatility figures along with Bitcoin’s meteoric price performance during 2019. The long, gradual slide at the beginning of the year preceded the parabolic price jump that would follow, which spiked as high as $13,800 before pulling back. Major jumps for this year have always followed dips in volatility, as depicted on the chart, but will that price behavior repeat any time soon?
Bitcoin has been range-bound since June, as well, bouncing back and forth between $9,500 and $12,500, without any definite signals of what its longer-term destination might be. Familiar price patterns form in a financial market, when the “herd mentality” takes over and causes prices to follow technical dictates. The “herd” lately, however, has been confused, as have the analysts that follow the daily Bitcoin action. Fundamental underpinnings are still present and developing with each passing day, but ranging behavior suggests “sluggishness” and a lack of momentum for the next big push.
The folks over at Forbes went on a hunt for answers and queried the following industry pundits for their views on what is happening with regards to Bitcoin:
- David Martin, chief investment officer at U.S. asset manager Blockforce Capital: “Bitcoin went on a tear to the upside from April to the end of June, but since then the price has been consolidating and rangebound.”
- Joe DiPasquale, CEO of cryptocurrency hedge fund BitBull Capital: “Bitcoin is in a consolidation phase after the late June rally which took it close to $14,000. Since then, the price is rangebound and trading volumes are low compared to the period between May – June. We attribute this to lack of retail investor participation and new money flow. Since Bitcoin has not definitively surpassed the $10,000 psychological barrier, we believe investors have adopted a wait and watch approach, as a breakdown below $10,000 can see the price plummet swiftly.”
- Evan Kuo, CEO and cofounder of digital currency firm Ampleforth: “The escalating trade tensions present considerable uncertainties.
Other industry observers expressed similar sentiments, regarding the reluctance of the market to push higher than the seemingly significant barrier of $10,000. The group also attributes much of the uncertainty in the crypto market to various international tensions, including the chaos in Hong Kong, the escalating trade tensions between the U.S. and China and its other trading partners, and the apparent recognition of economists across the globe that the signs of an imminent recession within twelve months are building.
Future Bitcoin movements are up for speculation, but for most any other asset class on the planet, long periods of low volatility are generally followed by a major break out, with odds favoring a continuation of the previous prevailing trend. For Bitcoin enthusiasts, the hope is for another major push toward All-Time-Highs at the $20,000 level. The current lull in volatility may persist and even fall, due in part to seasonality considerations, but the longer the ranging period, the greater the break out will be, whether up or down.
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