Bitcoin’s (BTC) volatility index has dropped to its lowest point since December 2016, and short-term day traders may want to consider trading other more traditional assets and currencies - as their current volatility levels are higher than that of the flagship cryptocurrency.
From January to February 2018, BTC traded between (approximately) $17,000 to $6,000 - which made the pseudonymous cryptocurrency an ideal asset to trade for day traders.
Bitcoin's Tight 8% Top-to-Bottom Trading Range
Since September 7th 2018, bitcoin has been trading in a very tight range - as its price has not dropped below the $6,000 mark, and it has also not moved past $7,000. This narrow trading pattern has restricted bitcoin’s top-to-bottom range to about 8%.
Data from the Bank of International Settlements (a global financial institution owned by the world’s central banks) - which was first referenced by MarketWatch, shows that bitcoin’s recent relatively tight trading range is similar to what’s observed in many of the world’s most frequently traded fiat currencies.
At just below 8%, bitcoin’s narrow trading range is about half that of the Argentine peso. As CryptoGlobe reported in mid-September, the weekly trading volume via peer-to-peer bitcoin exchange, LocalBitcoins, in Argentina had increased dramatically.
Traders In Turkey, Argentina Turn To Crypto
In September of 2017, weekly BTC trading was of around $2 million, however, it skyrocketed to $7 million in September 2018 - as the Argentine peso (ARS) dropped 35 percent against the USD due to the nation’s mismanagement of monetary policies.
Bitcoin’s 8% trading range is also half that of the Turkish Lira (TRY) as Turkey is currently experiencing economic challenges. In August, American president Donald Trump’s administration had doubled tariffs on Turkey’s steel and aluminum exports to the US.
This caused the Turkish lira to fall 14% against the USD (following the announcement). At the time, many Turkish residents had also revealed that they had been investing in cryptocurrencies.
Notably, data from the Bank of International Settlements also shows that bitcoin’s volatility level is currently lower than that of the Mexican peso (MXN) and the Brazilian Real (BRL). This is quite impressive because Mexico’s annual GDP is among the world’s highest at about $1 trillion, and Brazil’s GDP is of about $2 trillion.
Bitcoin (BTC) Competing With World's Top Economies
The World Economic Forum has also projected that by 2030, Mexico will have the 9th largest economy in the world - with a GDP of $3.661 trillion. Meanwhile, Brazil’s economy is expected to grow and become the 8th largest world economy with an estimated GDP of $4.439 trillion.
Commenting on the seemingly positive news for bitcoin, as investors tend to have more confidence in assets with lower volatility levels, Lennon Sweeting, the head trader at CoinSquare Capital, said:
For speculators, it poses more of a challenge to scratch out gains in bitcoin markets. But for the market, it’s a positive sign that things have begun to stabilize and normalize.
Sweeting added that it could take some time before bitcoin’s 8% trading range (between $6-$7K) is breached, as “there hasn’t been much impetus to suggest things are going to change any time soon."