Bitcoin Price Approaches $6,500 as Futures Volatility Sees Record Low

Bitcoin returned to a stable trading range on Tuesday, though bias was clearly to the upside after prices breached $6,500 for the second time in three days. That said, a sharp decline in volatility, observed in the spot and futures market, could make further rallies difficult justify in the short term.

BTC/USD Update

The bitcoin price reached a session high of $6,519.00 on Bitfinex. At the time of writing, bitcoin was seen trading at $6,474, where it was little changed from Monday. A look at the 4-hour chart suggests that momentum is on the rise, with the relative strength index (RSI) approaching 60 once again and the MACD trending in positive territory.

Global trade volumes in BTC have picked up slightly in the last 24 hours, with virtual currency exchanges processing $4.4 billion in transactions.

At a price-per-coin of around $6,500, bitcoin has a total market cap of roughly $111.8 billion, according to CoinMarketCap. However, its share of the overall market has declined in the last 24 hours thanks to sharp rallies in altcoins. Bitcoin’s dominance rate is currently 51.8%, based on latest available data. The total cryptocurrency market cap was valued at $215.8 billion.

Bitcoin Futures Volatility See Record Low

One of the most significant themes to emerge out of the 2018 bear market is the dramatic decrease in volatility across several major cryptocurrencies. This is especially the case for bitcoin, whose propensity to fluctuate has decreased substantially since the year began.

In addition to the bitcoin volatility index registering 22-month lows, action in the futures market has been equally tame. According to Kevin Davitt, a senior instructor at CBOE’s The Options Institute, bitcoin futures trading also experienced record-low volatility last month.

Referencing CBOE’s XBT futures contract, Davitt told MarketWatch that bitcoin “and cryptos in general are moving with very little speed,” adding that “the week ending Oct. 26th was the least volatile since futures were introduced nearly a year ago.”

Davitt calculates that the average weekly volatility for XBT futures in October plunged to around 6.6% compared to an average of 15.65% since the product was first introduced.

He added: “The waning cryptocurrency volatility is arguably even more interesting against the backdrop of escalating global equity volatility.”

Analysts have continually shifted their price targets for bitcoin as it became apparent that a return to exorbitant highs was unlikely in the near term. Mike Novogratz of Galaxy Digital recently told the Financial News that he expects bitcoin’s price to end the year at no more than $9,000. He did, however, maintain a strongly bullish outlook on 2019, arguing that a return to record highs was warranted.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Author:
Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi