The leading cryptocurrency has faced consistent lows of late, plunging to below $6,000 (£4,588.80) in August.
The lows have struck since the end of June and have caused investors to hold off due to lack of a strong direction for the currency.
As a result, volatility represented by Bollinger Bands Width has reached its lowest level since December 2016.
Bollinger Bands Width is a tool that uses standard deviations to track a price’s moving average.
The tool is a technical analysis indicator derived from the standard Bollinger Bands indicator.
Bollinger Bands are a volatility indicator. It creates a band of three lines which are plotted on a graph in relation to a currency’s price.
Coindesk notes that when measured by a standard deviation across all exchanges, Bitcoin‘s volatility is at its lowest since July 2017.
What is volatility?
Volatility is a statistical measurement of the dissipation of returns for a chosen market index, in this case, Bitcoin.
Volatility is measured either using variance between returns or in Bitcoin’s case by using standard deviation.
Commonly, the higher the volatility, the riskier the security.
For a cryptocurrency, which is a volatile asset, a low figure connotes some form of stability.
For Bitcoin, the price volatility has fallen to 3.12 percent.
This may pave the way for an upwards swing in price, as a low volatility rate causes investors to regain faith in the cryptocurrency.
If you look at the 30 day and 60-day volatility rates, these are even lower at 2.53 and 2.75 percent respectively.
What is Bitcoin currently trading at?
At the time of writing Bitcoin was at $6,500.90 (£4,964.83).
Today’s high reached $6,520.74 (£4,979.99) whilst today’s low was at $6,434.95 (£4,914.47).
The latest prices for other cryptocurrencies are:
Ethereum – $218.13 (£166.59)
Bitcoin Cash – $559.48 (£427.28)
Litecoin – $62.62 (£47.82)
XRP – $0.5235 (£0.40)