Bitcoin's Trading Range Dropped Nearly 90% This Year, Analyst Says

  • A market analyst has claimed bitcoin's average trading range dropped nearly 90% so far this year.
  • Notably, the cryptocurrency has been trading within an uncharacteristically tight range.

Bitcoin, the flagship cryptocurrency, has been trading within a tight range for the last few weeks, as it’s seemingly unable to buck the current trend it’s going through, despite seeing various developments unfold.

Naeem Aslam, chief market analyst at Think Markets UK, reportedly told MarketWatch the volatility has dropped so much BTC is now less volatile than some stocks, making it less attractive for traders. He said

The average true trading range of bitcoin has dropped to $157 from its January peak of $1,500. Its historical volatility has also dropped so low that stocks like Amazon and Apple are more attractive.

The drop Aslam pointed out, from a $1,500 to a $157 trading range, represents a difference of over 89%. As CryptoGlobe covered, the cryptocurrency’s volatility recently fell to lows it hadn’t seen since December of 2016, as its 30-day volatility index dropped to 1.42%, down from an 8% high.

The analyst added that as bitcoin’s price comes close to the “critical support level of $6,100,” it may soon start retesting this year’s low slightly below the $6,000 mark. So far this year, bitcoin has bounced off of this year’s low point numerous times, leading many to believe it has bottomed out.

Tom Lee, the founder of Fundstrat Global Advisors and a well-known bitcoin bull, has recently revealed he was “pleasantly surprised” by the cryptocurrency’s low volatility at a time in which the stock market became volatile. Per Lee, BTC found a floor at $6,000.

As MarketWatch pointed out Grayscale Investments, in its Q3 report, recently revealed institutional investors are still entering the crypto space, despite the 11-month long bear market it has been enduring.

The firm revealed it received over $80 million of funds led by institutional investors in the third quarter of this year. The report reads that just like in the first half of the year, the “majority of capital this quarter came from institutional investors. This group’s share of new investment increased to 70% in Q3, though the dollar-value invested was lower than in the two previous quarters.”

Despite the increasing interest, bitcoin itself is still within its tight range. According to CryptoCompare, it’s currently trading at $6,390 after rising 0.80% in the last 24-hour period.

Bitcoin has been trading within a tight range for the last two weeks

Most top altcoins are currently in the green. Zcash, EOS, litecoin, and XRP have all recorded gains between 1.14% and 1.85%, while Ethereum Classic (ETC), dash, and bitcoin cash, and monero have all risen less than 1%.

NEO notably stands out, as it’s up little over 4% in the last 24-hour period. It’s currently trading at $16.07. Behind its move could be the imminent launch of a new decentralized exchange on its network, or a community effort to grow the crypto in Latin America.

BTC Now Below $8300, but Tom Lee Says ‘2020 Should Be Great for Bitcoin’

Siamak Masnavi

On Thursday (January 23), Thomas Lee, Co-Founder, Managing Partner, and the Head of Research at independent research boutique Fundstrat Global Advisors, while appearing as a guest on CNBC's post-market show "Fast Money", predicted that "2020 Should Be Great for Bitcoin" and explained why.

According to data from CryptoCompare, at press time (around 10:20 UTC on January 24), Bitcoin is trading at $8,273:

BTC-USD 24 Hour Chart on 24 Jan 2020.png

This is the first time that Bitcoin has traded below the $8,300 level since January 14, as you can see in the two-week BTC-USD price chart shown below:

BTC-USD 2 Week Chart on 24 Jan 2020.png

Since Bitcoin reached $9,151 at 01:00 (UTC) last Sunday (January 19), the BTC price has been steadily falling, perhaps in anticipation of the "traditional" slowdown in Bitcoin trading around the time of the Chinese New Year (which, this year, starts on 25 January 2020 and ends on 11 February 2021). This expected drop in Bitcoin trading volumes was something that Arthur Hayes, Co-Founder and CEO of crypto derivatives exchange BitMEX, predicted in a tweet he sent out yesterday:

However, Lee, does not seem concerned about the currently falling prices of Bitcoin and altcoins in the crypto market.

Lee, who was appearing on Fast Money to give his views on the stock, bond, and crypto markets, was asked by the shows's host, CNBC news anchor Brian Sullivan, if he was still bullish on Bitcoin.

Lee replied:

"Yeah, 2020 should be great for Bitcoin because you got number one the halvening happening -- the block reward for miners getting cut in half -- that's a good supply demand change. I think last year the White House killed the Bitcoin rally with their opposition, but with the presidential election cycle underway, it's not gonna be in the headlines, and that's bullish for Bitcoin. And then with geopolitical tensions in the Middle East, I think that's good for crypto... We're getting a lot more interest in it from our clients."

It is worth remembering that two weeks ago Lee tweeted about a report he had published on January 9 about the outlook for crypto in 2020. According to this report, there are three positive convergences/catalysts for Bitcoin in 2020:

  • Bitcoin halving/halvening (which is expected to take place around 12 May 2020).
  • Geopolitical tensions in the Middle East.
  • 2020 U.S. Presidential Election

Lee said at the time that the bottom line is that "financial markets tend to discount 1-3 months, and maybe 6 months (max)" and therefore the "highest probability is halvening not priced in."