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The word is, Bitcoin is the new stablecoin. In fact it has, and behind this observation there are solid metrics and research results.
Recently, the CBOE (Chicago Board Options Exchange) has published their findings showing that the volatility of Bitcoin is lower than that of Amazon and the majority of FANG shares. Bitcoins and similar digital resources are, or were, known to move with wide margins.
Low volatility: CBOE and BVI trackers
The CBOE has clearly shown that the historical 20-bit Bitcoin volatility had fallen to 31.5% and this was lower than that of Amazon (35%), Netflix (52%) and a long list of stocks listed on the stock exchange as Nvidia whose 20-day volatility stood at 40 percent.
The following is the visible decline in the standard deviation. According to MarketWatch, the Bitcoin standard deviation dropped from $ 4,640 or about +/- 42 percent in January to $ 475 or +/- 7.3 percent in October.
The standard deviation is a measure of the dispersion of the price from the mean and the greater the dispersion, the greater the standard deviation. As such, this result has clearly shown that there is a reduction in volatility as the standard depreciation has decreased by a factor of 10.
Coincidentally, this result combines well with the statistics from the Bitcoin Volatility Index. The Bitcoin Volatility Index (BVI) measures the standard deviation of daily returns within a 30- and 60-day window and the BVI is a volatility indicator based on historical Bitcoin prices.
The BVI follows the volatility of Bitcoin prices in USD and the last 30-day estimate puts Bitcoin's volatility at 1.50 percent, while the 60-day estimate is 2.05 percent. In comparison, Gold's volatility is equal to 1.20 percent and the average fiat volatility varies between 0.5 percent and 1.0 percent in the same time frame.
Bitcoin is not the same currency whose prices are stable. The weekly volatility of Ethereum stands at 2.69% according to the BitMex data.
Ethereum $ 200 to May 2017
Ethereum $ 200 in October 2018Ethereum is the true stablecoin https://t.co/cfaO2mUoQj
– Joseph Young (@iamjosephyoung) 28 October 2018
Signs of a growing market?
It could be an indication that Bitcoin is finally touching the bottom. As we can see from the technical price tables, the BTC / USD pair has moved within a price range of $ 3,000 with a clear support of $ 6,000. This level has been hit a record six times, but despite the strong pressure from bears, prices recover and increase.
In addition to the strong support of $ 6,000, it is evident that whenever prices fall, the standard deviation decreases and the last 14 days have been characterized by a narrow trade range of $ 350 within the historical lows of October 15th. This raises more questions than answers: is this tapered pointer of volatility towards a maturing market or the market finally shaken by speculators?
One thing that people are ignoring in this silent market is the fact that, starting tomorrow, Bitcoin will have $ 6,000 for over a year. It is huge. It is proving that bitcoin works as a store of value.
– Nicholas Merten (@Nicholas_Merten) 28 October 2018
Charlie Morris, head of multi-asset at Atlantic House Fund Management in London, assessed the surprising volatility around the price of Bitcoin by saying:
"It simply means that the market is calm and balanced, which implies that the speculative interest is low, given that this bear market is 10 months old and getting tired, I would be inclined to be bullish for the next major move."
Bubble burst
Around this time of last year, at a time of FOMO, people were simply not willing to let go of a chance that they could see double or even triple their investment in Bitcoins in question of days or weeks. An opportunity that would take years in traditional investments.
This wave of purchases has increased volatility, hindering adoption and have been the hallmarks of a bubble that has been well observed by Angela Walch, a law professor at St. Mary's University in Texas. Angela is an expert who studies financial stability and cryptocurrency and in an interview with Vice said:
"Some of the distinctive traits for me are about the idea of FOMO – the fear of losing and not being able to get in. People see other people making a lot of money and just wanting to take part in. The real estate bubble is a good example of This people thought that another person would always want to buy their house from them at a higher price. "
Now that the bubble has exploded, many think the market will recover and develop within reasonable volatility, encouraging market uptake. In turn this will benefit the coin holders who are here for the long haul.
Shutterstock foreground image.
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