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History has witnessed the number of significant marks accomplished by Bitcoin as well as tremendous variations in its price movements. This volatility was one of the reasons that some had labeled Bitcoin a Ponzi scheme or merely bubble. However, a new report based on Dow Jones Market Data shows that Bitcoin’s volatility is slowly and consistently declining.
That might fill crypto enthusiasts with renewed joy and excitement, especially after the recent bloodbath of the crypto market in 2018. The report also indicates that that the world’s first and most popular cryptocurrency is about to mark another feat in the nearby future.
According the the report, which draws data from Dow Jones Market Data, the monthly trading range for Bitcoin stood at 7.8% in March, which is way lower compared to the average monthly trading range of 53.7% since October, 2013. If Bitcoin would be able to hold this monthly trading range of 7.8%, it would become the least volatile on records.
The cryptocurrency analyst Murad Mahmodov writes:
“Volatility is in itself a neutral signal. Historically, however, low-volatility periods in BTC have always preceded prolonged bull runs, especially after capitulation moments of high momentum as seen in November and December.”
Nouriel Roubini, Chairman of Roubini Macro Associates LLC, an economic consultancy firm and professor of economics at New York University’s Stern School of Business, has said that excessive volatility of cryptocurrencies can cease mass adoption of digital assets. If volatility in terms of monthly trading volume gauges above 100%, as seen in 2017, it could easily erase people’s belief in crypto. During a Senate hearing on cryptocurrencies and blockchain in last October, Nouriel Roubini spoke about volatility and other such deficiencies of digital currencies. Roubini stated:
“No one prices anything in bitcoin. Few retailers accept it. And it is a poor store of value because its price can fluctuate by 20-30% in a single day. And since its price has been so unstable or volatile almost no merchant will ever use it as a means of payment.”
According to Danny Scott, chief executive officer of CoinCorner, a U.K.-based cryptocurrency exchange, decreased volatility, and long-term stability might attract professionals from various industries. He further said that “With long-term stability, the interest in bitcoin is likely to grow as more people have the confidence to get involved.”
In contrast, Marty Bent, host of the Tales from the Crypt podcast, said that crypto enthusiasts should not expect much from the declining volatility of Bitcoin, and that the plunge in March was just an attribute of “market exhaustion” rather than of a “maturing market.” Bashing Bitcoin, he went further to say that there is almost no possibility of Bitcoin breaking the barriers of its deficiencies such as excessive volatility, unstableness, and insufficient decentralization. However, even if Bitcoin’s volatility will reach a sufficiently stable level, it will not happen overnight.