Nearly Ten Years of Decreasing Volatility in Bitcoin Suggests a Local Top Is Near

Tony "The Bull" Severino

1 year ago

2 mins read

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Bitcoin throughout its short decade long history has been on a steady uptrend in price and in a secular bull market. But while price is rising, volatility has long been trending down.

But what are the reasons behind this trend, and what exactly does this mean for Bitcoin the near and long term?

Early Exponential Growth In First-Ever Cryptocurrency Leads To Diminishing Returns

The cryptocurrency asset class is a highly speculative set of digital assets known for wild price swings. The notorious volatility has long kept institutions away from Bitcoin, who prefer slower, more stable returns on investment through the stock market, and other long-term investment vehicles.

But thanks to this speculative nature and wild price volatility, Bitcoin is the best performing financial asset ever.

Its returns easily beat Amazon, Apple, and gold.

Returns diminish over time as the asset finds its true value and adoption increases. As this happens, the volatility Bitcoin is known for has started to decline.

Top crypto analysts have been pointing out this trend for some time, and claim it is healthy for the long term growth of the first-ever cryptocurrency.

Bitcoin Volatility Continues To Decline, A Touch of Down Trend Line Could Act As Rally Peak

Relative volatility compared to the Nasdaq composite index has fallen to historic lows. The Bollinger Band Width is also signaling a sharp decrease in volatility over time.

The Bollinger Bands indicator created by market expert and analyst John Bollinger consists of a simple moving average and two standard deviations making up a top and bottom “band.”

Most price action takes place within these bands, and the middle SMA line can be used as a buy or sell signal when price passed through.

The tool is also used to watch for a squeeze in the bands, which often precedes explosive moves that cause a massive break in volatility stagnating.

Bands widen or contract depending on price action. Spinoff indicators such as the Bollinger Bands Width give a better visual representation of overall volatility.

BTC Weekly:

Spikes in the Bollinger Band Width have followed the down sloping orange trend line.

Additionally, these spikes in the BBW have also perfectly aligned with peaks in price.

Will this occur again?

Another tool amongst many to keep an eye on. pic.twitter.com/LCw6SCLm8I

— Nunya Bizniz (@Pladizow) June 9, 2020

According to Bollinger Band Width, each major peak in Bitcoin price has been repeatedly tapping a declining trendline.

After each touch, volatility drops further until another attempt to hit the trend line happens. Bollinger Band Width is currently trending below the ever-important line, potentially signaling that a local top is near in Bitcoin.

But before the leading cryptocurrency by market cap can touch that trendline, another spike in relative volatility and potentially another peak may be possible first.

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

Beyond his role at NewsBTC, Tony is the visionary founder of CoinChartist.io, an educational platform aimed at demystifying the nuances of cryptocurrency trading. CoinChartist.io serves as a valuable resource for traders seeking to enhance their technical analysis skills. The platform offers a range of learning tools and resources designed to empower traders with the knowledge to make informed trading decisions.

In addition to his educational initiatives, Tony is a prolific author and a dominant voice in the crypto community. He writes the CoinChartist VIP newsletter, a weekly dispatch that has become a staple among crypto enthusiasts, revered for its insightful analysis and actionable trading advice. This newsletter has consistently ranked as a best-seller on SubStack, boasting thousands of subscribers who rely on Tony’s expertise to guide their trading strategies.

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Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
His professional affiliations underscore his commitment to excellence and continuous learning. As a partner of Elliott Wave International and TradingView, Tony collaborates with other leading experts to enhance his knowledge and skills. His active membership in the CMT Association further aligns him with the highest standards of industry practices and ethics.

Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.

Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.