Bitcoin (BTC) 180-day volatility dived to its lowest since November 2018, recording a 23-month low of 0.028 on Sunday. The market was hit by different unsettling news all week and the price started to stumble on Thursday through Friday.
The effects were noticed after the U.S. Commodities and Futures Trading Commission and Department of Justice leveled charges against BitMEX’s founders. In addition, the news that President Donald Trump tested positive for Covid-19 hit headlines during the week.
Though this news was major, they resulted in less than a 5% drop in the price of BTC, which continued its period of calm in a volatile and fickle market. This period has been recorded for close to a year, with the value of this leading cryptocurrency increasing steadily.
News from Coin Metrics indicates that the volatility of Bitcoin has dropped 43% in the last 30 days. This is a huge drop in volatility, and could be an indication of an upcoming price breakout.
The drop is significant to the market, as many traders have remained bearish through the weekend, which can be seen from the perpetual futures funding rates on leading derivative exchanges OKEx, BitMEX, and Huobi.
The funding rates on these three exchanges turned negative on Friday with traders increasingly taking short trading positions. Data from Skew also shows that these negative rates continued through the weekend.
Through the negative news that swamped the market, some buyers moved to start reversing earlier declines. The result of such moves pushed BTC above $10640 on early Sunday morning. The price was a 2.5% increase from the week’s low of $10375.
The volatility of an asset affects its price in future, as investors might be worried about their money, or excited about the future. Experts often point to a huge drop in volatility as an indicator that a big surge and potential bull market is on the way.
The drop in volatility for BTC therefore means that investors should watch out for the daily or weekly prices and react accordingly. One of the moves would be to buy at the current price, as the expectation is a price breakout in the near future. Investors should always expect drops or surges in volatility and incorporate it in their investing strategy.
The drop in volatility even after the big news in the course of the week indicates a growing cryptocurrency market.
Image courtesy of pixabay
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