Bitcoin keeps alarming investors in the past few weeks because its constant price unpredictability. Naturally, people know cryptocurrencies as very volatile assets, but Bitcoin’s recent statistics might worry the asset buyers. Late last year, the digital asset space witnessed a phenomenal increase in price within a short period, clearly establishing that BTC’s volatile nature contributed to the quick rise.
The asset amassed $20,000 to its value, letting it stabilize around $40,000 before it declined. When the asset skyrocket, people understood that a price correction is inevitable and experienced traders expected it. When the price corrected, it showed that the asset could lose as fast as it gained early this year, significantly since it frequently declines daily, which experts attributed to some investors’ continuous selling pressure.
Current volatility similar to last year’s
Statistics from Skew explained that the current fluctuation in BTC’s price is similar to 2020’s volatility rate. The data revealed that the present rate is identical to when the pandemic took a stronghold on most countries, March. The charts linked the continuous rise in the volatility rate to the one experienced last year’s March.
The pandemic led to an unexpected event for most digital asset investors, as most assets declined. Skew uses an interesting calculation to derive crypto’s volatility rate. The data company utilizes the standard deviation of that asset’s price over a period.
Looking at the statistics, Skew revealed that BTC had a volatility rate of 103%. This conclusion means that during the 30 days, BTC has experienced price changes at the rate of 103%. The biggest reason for this alarming volatility rate is that the digital asset keeps surging and declining for 30 days.
Even during the period, it experienced its highest peak and faced some significant correction, which at some point saw the asset at the $30,000 range. Investors should be rest assured that despite the closeness in statistics, Bitcoin’s present position is far from March 2020. When Bitcoin declined last year, it was significant because of the COVID-19. Now, the price volatility is signaling the bull market, meaning that Bitcoin could surge soon.
Bull runs significantly fluctuate prices
Most investors understand that bull runs push price increase, thereby causing digital assets to record gains at a period. When assets increase in price, traders use the opportunity to secure profits, thereby contributing to price corrections. After the bull run emerges, price corrections might follow, thereby increasing the volatility rates through sell-offs for profit-taking.
Bitcoin saw some profit-taking, which significantly caused consistent price corrections. When traders continue to sell-off an asset at an alarming rate, it will not stabilize and then necessitate the high volatility rate.
As the world gains some hold over the pandemic, the COVID-19 does not affect digital assets anymore, especially since most activities are returning to normal. When an asset has its bull run, it is very natural for it to experience fluctuating prices; hence investors should note that bull runs cause high rates.