Bitcoin is famous (or infamous) for its jumps and daily price drops, but lately the graphics seem to show less hectic times, has the volatility of the cryptocurrency fallen or are we in business as usual?
We graph the numbers to find out, and although things have been quiet lately, it certainly has not been a quiet 2018 for the oldest and largest cryptocurrency in the world. In fact, bitcoin (BTC) has seen daily volatility (or a range of inter-day variation) of more than $ 1,000 as much as 43 times so far this year (using price data from Bitcoin's price index). CoinDesk).
That would seem a lot, but it's not that simple. When we decompose the data over time, another pattern reveals itself.
The number of days in 2018 when the trading range was above $ 1,000 was the highest in January, passing that level 21 times. In particular, that month saw crypt markets shaken by regulatory talks in South Korea and China that caused nervousness among traders and investors.
Continuing, the number of days that the trading range was above $ 1,000 in February was reduced by almost half to 13.
Since then, volatility has plummeted, falling to seven days in March and only two days in April.
So what's going on?
It is worth noting that the price of bitcoin began to drop sharply from near-record levels in early January amid market anguish over Asian news.
Given that volatility tends to increase during the bear markets and fall during the bullish price action, this pattern is something that could have been expected.
Then, as the bearish atmosphere prevailed earlier in the year, the frequency of trading ranges above $ 1,000 was at an all time high, while the subsequent bullish change in the market had the opposite effect.
For example, BTC recovered from $ 6,443 to $ 9,536 in the last 32 days. Meanwhile, during the same period of time, the average daily volatility fell to $ 454.
In addition, the daily volatility stood at $ 278 yesterday May 2, almost 70 percent below the average daily volatility of $ 922 seen this year and below the 2017 average of $ 348 (predominantly a bull market).
What happens next?
A prolonged period of low volatility is often followed by a strong increase in volatility (large movement). The theory of the reversion to the mean also establishes that the readings (volumes, prices, yields) eventually return to the means (averages).
Therefore, it seems safe to say that the business is about to begin.
At this time, the technical configuration in the charts is bullish, so the big movement, when it happens, will probably happen towards the upper side. But, as always, there are no guarantees that this will happen.