Bitcoin’s Lower Volatility Could Be “Market Slowly Adopting” It as a Store of Value, Analysts Claim

Francisco Memoria
  • Bitcoin's volatility has hit a 12-week low and could soon hit a 17-month low.
  • This could be in anticipation of the SEC's decision regarding thee VanEck-SolidX bitcoin ETF, analysts argue.

Available data shows bitcoin’s volatility has seemingly been dropping and is on its way to new lows if it keeps its current pace, at a time in which altcoins see their prices vary wildly. Bitcoin’s lower volatility, according to analysts, could be the market adapting to it as a store of value.

According to a 30-day index of BTC’s volatility, the flagship cryptocurrency recently hit a 12-week low of about 2.53%, its lowest level since July 10, when it hit about 2.45%. The data, from Buy Bitcoin Worldwide, shows it started the year at little over 8%.

If the index breaks below its July 10 low, MarketWatch added, it will see a 17-month low. Bitcoin’s volatility was lower when it was trading at about $1,800. Per MarketWatch, Element Digital Asset Management went through a few theories to explain its declining volatility, and pointed to BTC becoming a store of value.

Thejas Nalval, Elements’ portfolio director, and Kevin Lu, its director of quantitative research wrote:

One can argue that the depressed volatility patterns we’re seeing with bitcoin is the market slowly adopting bitcoin as a SoV [store of value]. That’s a fun theory but premature.

The analysts were reportedly “a bit more skeptical” to the market becoming more transparent and efficient, as liquidity to them is predominantly a reflection of natural supply and demand. To them, “the market has quite simply run out of juice for now. It’s almost become boring.”

The flagship cryptocurrency’s trading volume has also been dropping as in September of this year it was trading in a range just below $1,500, which is the smallest 30-day trading range it has had since July of 2017.

The apparent lack of interest, per Element Digital Asset Management’s analysts, could be related to the Securities and Exchange Commission’s (SEC) pending decision regarding the VanEck-SolidX bitcoin ETF. Earlier this year, the SEC rejected nine bitcoin ETF proposals from ProShares, Direxion and GraniteShares, which saw BTC’s price drop 3.5%.

Per the analysts, a green light from the SEC would make things more interesting as they wrote it “seems like everyone is waiting on the sidelines for someone else to make the first move.” At press time, bitcoin is trading at $6,477 after falling 1.54% in the last 24-hour period.

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Despite the cryptocurrency’s decreasing volatility and price, developers are still hard at work. As Cryptoglobe covered an experimental vending machine now dispenses Coca-Cola after receiving BTC payments via the Lightning Network (LN).