BTC’s decreasing volatility: store of value, adoption, or it’s become boring?

04 Oct, 2018
by Fifi Arisandi
Analysis
BTC’s decreasing volatility: store of value, adoption, or it’s become boring?

Research by Element Digital Asset Management said Bitcoin’s decreasing volatility and volume these days may be a sign of the market’s adopting it as a store of value or simply the market’s got bored with it.

Meticulous crypto enthusiasts may have noticed that the highlight of cryptocurrency’s price update these days is less about Bitcoin and more dominated by altcoins, such as ETH, XRP and stablecoins, particularly the controversial USDT.

In numbers, according to Buy Bitcoin Worldwide, Bitcoin’s 30-day volatility index as per October 2nd hit a 12-week low of 2.55%, which is the lowest level since July 10th. It would even reach a 17-month low, should the index break the July 10th low.

What is actually happening here? What caused the decreasing volatility of Bitcoin? Or probably “what is happening with Bitcoin?” is the more appropriate question to ask.

According to Element Digital Asset Management team who conducted a research on this particular matter, there are several possibilities that may have caused it.

The first is, it could be that the market is slowly adopting Bitcoin as a store of value (SoV). The team thinks it’s a “fun theory” yet “premature", as conveyed by the company’s portfolio director, Thejas Nalval.

Another argument that the analysts dismissed immediately is the opinion that market has become more transparent, that Bitcoin’s liquidity is a reflection of natural supply and demand. “We’re a bit more skeptical,” they said.

The analysts believed that Bitcoin has bored the market, as they said, “We think the market has quite simply just run out of juice for now. It’s almost become boring.”

Regardless the analysts’ opinion, data from Bitfinex did show Bitcoin’s declining trading volume, with 643,000 BTC in September, compared to 920,000 BTC in August and 2.12 million BTC in December 2017, when the price reached its all time high, as reported by Market Watch.

The multiple rejections against Bitcoin’s ETF proposals, like the VanEck and the Winklevoss', may also have taken its toll on the cryptocurrency itself. Meaning, a green light from the regulators that would lead to mass adoption may have made the coin less boring.

“But for now, traders are yet to blink, keeping their cards close to their chests,” the analysts said. Moreover, they added, “Seems like everyone is waiting on the sidelines for someone else to make the first move in what could be an extremely long game of chicken.”

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