Posts

Bitcoin Volatility At All Time Low: What Direction Is Next?

avatar of @readthisplease
25
@readthisplease
·
·
0 views
·
2 min read

Looking at the volatility index you can see how bitcoin’s volatility is currently at all time low, because price fluctuations have been on the all time low as well. Volatility is the rate at which an assets price fluctuates, it could be upwards or downward, so in my words I will call it the rate of flow liquidity is pumped in or pumped out in an asset over time. But lets be aware that the amount of liquidity that is being pumped in or out in an asset varies depending on the asset to determine its volatility. For the fact that we are having an all time low in bitcoin’s volatility doesn’t mean that liquidity doesn’t flow in bitcoin, the a count of liquidity flowing into bitcoin right now that we consider a low volatility won’t be considered a low volatility on another asset.

For instance, with the bitcoin’s low volatility statement the daily trading volume of bitcoin according to coinmarketcap is $26 Billion, this is the amount of liquidity that got traded in bitcoin in the last 24 hours but yet, the volatility is said to be at all time low, imagine this liquidity in a low cap coin, like hive, what do you think the volatility. Will be like? This is why it is said that higher cap assets have the tendencies of lower volatility the more their market cap keeps increasing. A higher price asset gets a higher market cap and later gets a lower volatility, reasons its advisable to invest in lower caps if you want to turn your money to 2X+, because the lower the asset price, the lower the market cap the easier to see a higher volatility. The bitcoin volatility will keep reducing the more the price of bitcoin keeps increasing.

When volatility is at all time low, there are three things that can happen, the price can be stable if the market maintains the price and volatility or he price can go higher or lower. Depending on what the bitcoin whale traders do, they can decide to remove their liquidity and put them else where, this can increase volatility but on the downward direction, they can still decide to increase their liquidity in the market by pumping the market more with higher liquidity, causing volatility to go the upwards direction. It all depends on the big players of the bitcoin game.

Posted Using LeoFinance Beta