Bitcoin’s Volatility Index Falls to Its Lowest Point Since December of 2016

Bitcoin, the flagship cryptocurrency, has been trading within a tight range over the past few days, so much so that its volatility index is now at a low it hadn’t seen since December of 2016, before last year’s bull market that saw it hit an all-time high near $20,000.

According to CryptoCompare data, bitcoin is currently trading at $6,460 after only falling 0.07% in the last 24-hour period. Since October 17, the cryptocurrency has been trading between the $6,650 and the $6,400 mark, with the range tightening to $6450 - $6,500 in the last three days.

Bitcoin has been in a tight range, and its volatility keeps declining

The tight trading range has also been accompanied by declining trading volumes that have seen leading cryptocurrency exchanges like Binance, OKEx and Huobi trade less than $1 billion per day - a figure they easily used to surpass.

According to bitvol.info, bitcoin’s 30-day volatility index is now at a 1.42% low, its lowest since December of 2016, when it hit 1.36%. Last year’s bull run saw it reach a high of nearly 8%, but BTC’s price decline has seemingly been seeing its volatility disappear as well.

Currently, the 60-day volatility index is at 2.06%, while the 252-day index is at 3.56%. The index calculates the cryptocurrency’s volatility using the standard deviation of its opening price over the specific time period.

The cryptocurrency’s low volatility could mean it’s maturing and starting to be seen as a store of value. As covered, BTC was barely affected by this week’s market sell-off, that saw the Dow Jones Industrial Average drop about 3%. As Brian Kelly, the CEO and founder of BKCM stated, cryptos seem to be “mostly separated” from the broader markets. He said:

I don't know of anyone saying 'Microsoft dropped, I better sell bitcoin to cover my margin'

Rob Sluymer of Fundstrat Global Advisors has recently argued there may be a “silver lining” to the cryptocurrency’s plummeting volatility, as we may be looking at a potential upside trend reversal – although Sluymer admits it’s “premature” to conclude it’s coming.

Willy Woo, a prominent market analyst, has recently argued that currently bitcoin is still in a bear market as its NVT Ratio, which puts BTC’s market cap against the volume transferred through its network, shows it. Nevertheless, he argued it’s still a good time to enter the market, as the price is “sitting comfortably under the 200 day moving average.”