Topic: Why is Bitcoin's daily price fluctuations getting smaller and smaller? - page 10. (Read 2111 times)

Decreasing volatility is not only a "perception", like some have guessed, but real: The Bitvol Index, which measures price volatility, is going down since new year approximately.

Apart from the reasonings in this thread (I agree to some, while not to others, see below) this phenomenon seems to be a common fact in all advanced bear markets Bitcoin has seen until today. In 2014, for example, after 2-3 months approximately the price swings became much smoother and gave the illusion of "predictability" and "stability" (I remember it was around the $400 price level). You can see it in Bitvol's graph (click on "All").

I agree with Hydrogen that one of the reasons may be the behavior of newbie traders which tend to be vulnerable to FOMO while panicking when they smell a crash. With time, they quit or learn that not every movement means "da moon" or "death".

I don't believe in a negative correlation between the number of transactions and volatility. Normally, it should be the other way around: when there are many transactions, then price should be more stable, because this means "thicker" order books and so the volume needed to change the price is bigger.

However, it's difficult to generalize here - I think the type of transaction is the key. Direct buy/sells of goods and services without fiat involvement should stabilize the price, as well as simple limit orders at exchanges. Transactions that boost volatility, in my opinion, are 1) market orders and 2) advanced order types like stoṕ-loss orders (because they tend to lead to extreme price swings when they're triggered). These two kinds of transactions are more likely in "FOMO" and "panic" phases, and we're currently not in this kind of phase, so there is less activity of these.

Mmh, I'm not so sure. I consider the launch of the Lightning beta a very important positive announcement. But where you're right is that this news didn't "make it" into the mainstream media, so outside our filter bubble nobody noticed it.

I'd think that the reason of this is because the market doesn't know which way the price should be going, the entire market is split between being bullish and bearish. So I'd think this is the time of uncertainty, so the market could go up, down, sideways, in circles, but who knows on this!

TLDR: Time of uncertainty.

There can be a number of reasons behind this:

1) The primary reason in my opinion are big investors. Such people trade in big volumes and a single investor can cause huge fluctuation in the price. Now most of big investors exited when the prices reached the peak at $20000. They are not investing now and thus no further price fluctuations.

2) Another possible cause for fluctuation is people starting to buy in mass. This is also not happening as they are fearing. 

Let's discuss these.



It's not the percentage of Bitcoin investors that consist of speculators that matter, it's what their transaction activity is that matters. What you're talking about doesn't explain the volatility in the price.



Hoarders, or more properly hodlers, don't impact the price volatility at all...because the don't transact.



I've corrected this for you. Fewer transactions = less volatility and therefore a narrow price range over a period of time.

A stronger reason for low price volatility is the lack of news or developments, good or bad during the recent weeks/months. There hasn't been much news about Bitcoin. This is probably a good thing. The main stream media can realize that this isn't a fad and potential new investors are getting more and more intrigued by Bitcoin, used to the idea, by the days that go by with low volatility.

Newbie traders making mistakes mostly , and the market doesn't really know where to go and is confused between being bearish or into a bull run .. The price is now increasing again since people are buying so the fluctuations are back now .

Volatility decreasing has been an ongoing theme for awhile now. Back when the first bitcoin fork announcements were made the effect on bitcoin's price was very noticeable. The next bitcoin fork announcement had less of an effect on btc price. The 3rd fork announcement was weaker than the 2nd. The same precedent applies to price movements. As time passes and we gain more information on how events and news affect valuation, people increasingly confident about what will happen or how bitcoins price will be affected which causes decreased volatility.

A good part of volatility also may have been attributable to the large number of new and inexperienced traders who were buying and selling in all of the wrong places which contributed to larger price movements. Many less experienced rookie traders likely quit causing decreased liquidity and reduced buying on bust cycles could have tightened things up.

As time passes we all learn more about how bitcoin's price performs under different conditions. This produces less uncertainty which in turn contributes towards reduced price volatility. Also at the moment there probably isn't a high expectation for bitcoin's price to move one way or the other. If something big happens we might see volatility increase again.

I think the bitcoin price is correcting at this point which is why the fluctuations on the price charts are actually smaller, which is a good thing which means its possible that the price might start going up now.

Considering the fact that many traders of bitcoin trapped on its price during the peak season. The downturn of bitcoin seems a crucial for those people who had bitcoins. The possibility also that FUD news and current ban of the countries help the bitcoin's fluctuation to become stagnant. The result of these two have a greater effect for the bitcoin's price.
1. No one would not sell bitcoin during bear market, unless they are fool nor an urgent needs.
2. There is a limited buyers for bitcoin right now due to the regulations and FUD news.

Price is now moving sideways but i do not know if we can consider it less volatile the spread of the price is still wide.
The price is consolidating after and speculators and me included is hoping a price rise after this consolidation.

Someone who have bitcoin that's no invested only, yap we can say if the people who bitcoin just invested only maybe the price will high with a fast process. But, the people who bitcoin they are use bitcoin as a trading too, so when at this time the price sometime up with a bit percent and sometime down with a bit percent. The price will not some, there are must move everytime.

Feeling has been sideways, less and less fluctuating

There are more similar and unrelated factors as well which is causing this gap to get filled very fast. The theory is simple and it says one thing for sure . .
Since the dip has occurred for the bitcoin (January) the hodlers of the bitcoin started to worry about the prices and were concerned a lot about it. After that those who were the weak one started selling their bitcoin at alarming rate and looking at the prices this selling process got increased a lot in the time. Whales were the one who saw the great opportunity coming up front and when the prices were low they started to buy more and more coin.

The thing is, there was buyer-seller ratio when this happened and thats why the price fluctuations were very very high in the first place. However, as the time passed enough bitcoins were bought and the number of buyers is now decreasing. Thus though there are people who are selling the coins, there are also no more people who are going to buy them. So the process is kind of halted or slowed down and thus the gap is getting filled smaller smaller day by day.

As we can see that bitcoin price is continuously  falling and one of the reason why it is happening because of a lot of people dumped their bitcoins. Of course as a human, emotion is still part of it. If you see that bitcoin is falling and you also see that you are losing your money too. The first thing that will pop up is nervousness. You might think that all your investment will might drained and it will lead you to dumping. That's why we need to encourage those bitcoin holders to hold their bitcoins to help bitcoin to rise again.

For me its just a circulation of the price of bitcoin and we have nothing to do with it to rise again. All we can do is to wait for the price to rise up again.

the big movers of the bitcoin prices are speculative funds , who generally making money from the high volatility , and now they are standing away waiting the next trend as the prices now near big support price   

People are reluctant to trade because of the market downturn.

Trading volume is low, market price fluctuation is small!

Many people in hodl's own digital crypto currency wait for the market to rise when it's trading!

In terms of percentage it is almost same but when you talk about in dollars now it looks small because when BTC price is around 10K then 10% means it 1K fluctuation but when BTC is at 6K range then it will be around 600$. The number may look small but in terms of percentage, the fluctuation is almost same.

I do agree that when the price reaches to bottom then price movement may reduce because a lot of people may do not want to sell at lower price.

What less volatility are you talking about? Because I just saw Bitcoin last 2 days ago jump from 6,600$ to 7,000$ and I cannot consider a 400$ as a less volatile move. But if you mean Bitcoin's price going on the same prices every other day then that might mean that Bulls and Bears are still fighting to take control on where the proce of Bitcoin will go. But overall the market is still bearish as we are in the lower end of the down trend.

There are two possible reasons for this :

1. A certain percentage of Bitcoin investors consist of speculators. They are causing most of the volatility in the market, so when there is a dip in the price, these speculators sell quickly to protect their profits. Once they exit the price becomes less volatile.

2. A large amount of Bitcoin hoarders are not paying with bitcoins when the price is lower. They get less value for their money, when the price is low. So when there are not a lot of transactions on the exchanges, the price will be more stable.

Low price = less transactions & trading = less volatility. 

Why is Bitcoin's daily price fluctuations getting smaller and smaller? How do you view the current price of Bitcoin and how we should handle the transaction in the later period?