Bitcoin’s price volatility level is below 50%, after having reached its highest point this year. At the end of March, its price volatility exceeded values ​​above 160%.

According to an analysis by Coin Metrics, Bitcoin’s daily price volatility, measured in terms of its 30-day average, recently reached its lowest value in the past three months.

The week of March 7th, just before Bitcoin’s drop in price on March 12th, Bitcoin’s price volatility level was below 50%. This parameter then recorded a rise to the 140% level after the World’s Health Organization (WHO) declared the spread of COVID-19 as a pandemic.

The volatility in the price of the cryptocurrency in a period of 30 days even reached 167.24% on March 31st, the highest point since January 2014, according to data from the asset management company Blockforce Capital. Additionally, its price volatility in a period of 60 days reached 122.95% on March 31st, which is its highest value since February 2014, according to charts by Blockforce Capital.

Coin Metrics highlights that Bitcoin’s price volatility has been below 50% on 35 occasions, since the first time Bitcoin’s price reached USD 1,000 in November 2013. Furthermore, it states that the cryptocurrency has not been able to maintain those price volatility levels for a long time. A total of 80% of those periods of moderate and low price volatility lasted less than 20 days, whilst 50% of them lasted less than 10 days. For this and other reasons, Bitcoin has found it difficult to achieve massive adoption as a means of payment.

To address the behavior of Bitcoin’s price volatility after the cryptocurrency has gone through those periods of volatility lower than 50%, Coin Metrics studied the percentage change in its price volatility in 22 of the 35 periods aforementioned during two months. These periods are segmented in the last 10 days before leaving the volatility zone below 50% and the following 50 days when the volatility grew above that threshold.

Bitcoin exhibits price volatility levels higher than that of traditional assets and indices. However, in 2020 it has remained below 0.05, except in a period of one and a half months, after March 12th, in which its price volatility recorded its highest point since 2014. A chart that uses non-percentage values ​​for the volatility shows this.

On the other hand, Bitcoin exhibits less volatility than other cryptocurrencies, according to a comparative analysis between the main cryptocurrency and various altcoins by Coin Metrics. For instance, in January and February of this year, with values in Bitcoin’s price volatility below 50%, cryptocurrencies like Ether (ETH) and Ripple’s XRP exhibited a percentage of price volatility that rose to 70%.

If low volatility remained at moderate levels, investors would feel greater confidence and cryptocurrencies would be able to achieve further adoption as a means of payment. The latest Bitcoin’s low price volatility level will attract more people to buy the main cryptocurrency on the market.

By Alexander Salazar

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