Bitcoin Price Volatility
One of the first things that you would notice if you looked at a Bitcoin price chart, is volatility. Like many other securities, Bitcoin’s price is also determined by market forces of demand and supply. And since here both demand and supply are subject to change on a very frequent basis, it adds to Bitcoin’s price volatility. Supply changes with the amount of Bitcoin that’s been mined. On the other hand, demand is subject to and easily affected by many factors, including frequency and volume of trading activity, news, views, supply, and change in large ownership stakes. Actually, high volatility is a characteristic of the entire market for cryptocurrency. It is also one of the reasons that the market is dominated by traders rather than investors.
3 Factors That Support Bitcoin
Now, Bitcoin sure has had a rough ride since the beginning of the year. Bitcoin price is down from highs of $19,000+ (mid-December, 2017) to around $6,500 currently (June 22nd, 8:00 AM UTC). In terms of market cap, Bitcoin is down from $232 billion to $111.5 billion over the same period. These negative figures have certainly made cryptocurrency enthusiasts wary of Bitcoin. However, there have been certain positive developments with respect to Bitcoin which often remain unnoticed by a novice investor.
- Bitcoin mining time has reduced significantly, as evidenced by a rising difficulty rate.
- Bitcoin’s market dominance has risen from 33% to 40% since the beginning of the year.
- Bitcoin price volatility has gone down significantly.
Volatility Down By 80%
We looked at three key markets for Bitcoin – Bitfinex, HitBTC, and Kraken. Average volatility across these markets measured at 82 on January 1st, 2018. It’s now down to 16.6. Bitcoin price volatility is thus, down by a good 79.8% since the beginning of the year (as evidenced by the chart above). Volatility is calculated as the standard deviation from all market trades by Bitcoinity.org.