Price volatility for Bitcoin is picking up again as the relatively calm rally of the past few months unchains itself. March saw Bitcoin’s price change only 1.1 percent daily, a local low for 2019. However, since then, volatility has picked back up drastically.
Bitcoin Volatility Blows Up
In April, Bitcoin saw its price spike drastically and volatility rose back to expected levels of 3.5 percent. This spike has continued further going into May with volatility levels reaching 4.7 percent daily, on average.
Such volatility was often to be expected throughout most of 2018. In December of that year, volatility resulted in, on average, around 4.2 percent in daily price changes. The spread between the upper and lower trading bands has become significantly wider since the start of this year.
— Bloomberg Crypto (@crypto) May 29, 2019
Although traders accustomed to the lower volatility levels might begin to worry, the current state of BTC movement is quite in line with its price history. The relatively calm trading in March was an exception rather than an outlier. Some analysts have claimed that these spikes mean that the market is getting detrimentally stretched, but the bullish momentum seems largely responsible.
What’s Going On?
The price rally is partly due to increased interest from mainstream financial firms. Fidelity, JP Morgan, and others have been actively pursuing making their mark in the cryptocurrency space. There’s also speculation abound over the anticipated Bakkt exchange, which is likely further fueling long-term expectations.
However, the volatility is also a result of the upcoming Bitcoin halving, set to occur in 2020. With mining rewards dropping by 50 percent in May 2020, Bitcoin’s supply will be much scarcer. It could well be argued that Bitcoin’s current price volatility comes down to the basic economics regarding supply.
Being just a year away, it is expected that further price volatility will rise as we approach the next halving event.
Do you expect more volatility as we approach Bitcoin’s halving in May of 2020? Let us know your thoughts in the comments below.