Bitcoin prices have been struggling since early May, but there could be some positives emerging from the digital currency’s decline. One of those positives is declining volatility, which could be a sign the largest cryptocurrency is bottoming.
“Bitcoin’s rolling 30-day annualized volatility has sunk to around 61 percent, up modestly from its low of 50 percent earlier this month, according to an analysis from Pension Partners,” reports CNBC. “Still, this volatility pales in comparison to the annualized volatility seen last year, north of 150 percent.”
Bitcoin has been in a tailspin since early May and some traders believe the digital currency needs to make significant gains before market participants turn bullish. By some estimates, bitcoin would need to jump 30% to legitimize any rallies from current levels. A move of 20% typically confirms a new bull market.
“Ultimately, after its volatility has become this depressed and the cryptocurrency has lost as much as 70 percent from its December peak, I believe the selling has become exhausted, and a bottoming process can begin,” according to CNBC.
Near-Term View for Bitcoin
Bitcoin currently resides slightly above $6,700 with a market capitalization of $115.11 billion. A major hurdle for bitcoin and other digital currencies is adoption among advisers and long-term investors and one of the primary reasons those demographics have not embraced crypto in significant fashion is volatility that is often significantly higher than on traditional asset classes.