Bitcoin
marked a slight decrease of less than 2% in the past 24 hours, but its price
remains above $10,000 for now. Things are looking relatively calm, as 30-day
volatility has dropped to a low not seen since May. Yet if history is any
indicator, it’s times like these that portend a violent move.
Bitcoin
Trading Between $10,000 and $11,000
For the past
eight days, Bitcoin has been trading between $10,000 and $11,000, while its
dominance rate has hovered around 70%.
However, the
past 30 days have seen relatively low levels of volatility. In fact, it has not
been this low since May.
As Tech Tic
Technologies reported back in June, Bitcoin’s volatility, especially when
raging, is a double-edged sword. Some believe it to be a good thing because it
shakes out ‘weak hands’ and guarantees that BTC goes to the strongest holders.
It’s also a function of the cryptocurrency’s scarcity because as the supply is
static, the price can be volatile.
On the other
hand, it also contains quite a bit of downside. It’s commonly associated with
price and market manipulation. This is among the reasons why the US Securities
and Exchange Commission (SEC) hasn’t yet approved a Bitcoin ETF.
Bitcoin’s
volatility also makes trading a lot riskier. Expert traders typically see this
as an advantage because they can capitalize on sudden price moves, but those
who are less advanced can experience serious losses due to the frequent swings.
Calm
Before the Storm?
Bitcoin’s
fundamentals are looking stronger than ever. Its hash rate is increasing
rapidly which could be tied to increased network security. At the same time, we
are anticipating the launch of Bakkt on September 23, which has been one of the
most awaited events within the crypto community. Bitcoin’s halving is less than
250 days away. That will decrease the supply of freshly-minted bitcoins, which
should, in theory, drive its price higher, as it has always done.
In other
words, the current range-bound trading pattern may not be accurately reflecting
these underlying factors, among many others.
Back in May,
when volatility levels were as low as they are now, the price marched forward
and almost doubled in June. Of course, should any violent price swing occur, it
could be in the opposite direction.
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