Bitcoin Price Drifts Slightly Lower as 2018 Draws to a Close

Bitcoin drifted slightly lower on Monday and was poised to end the year below $4,000 after a promising rally at the end of last week. The slight dip in price was consistent across the entire market as trade volumes declined sharply.

BTC/USD Update

The bitcoin price reached a session high of $3,986.90 on Bitfinex before consolidating just below $3,900. That was a significant premium compared to other exchanges, where BTC/USD was valued between $3,765-$3,780. At the time of writing, bitcoin was worth $3,766.18 on Coinbase.

Aggregate pricing data courtesy of CoinMarketCap show an average BTC value of $3,806.48, down 1.5% on the day. Exchange-traded volumes have also fallen to $4.7 billion from highs near $5.7 billion on Friday.

The leading digital currency briefly traded north of $4,000 late last week following a sudden burst of activity from the bulls. Prior to that rally, bitcoin and the broader crypto markets were mired in a multi-session downtrend.

Closing the Books on a Volatile Year

While volatility is nothing new for bitcoin, the growth of the market over the past two years has magnified both gains and losses for the average investor. Extreme swings in price saw BTC reach a high near $17,600 in January and a low of around $3,100 in December. Compared to last year’s record high, bitcoin saw a peak-to-trough swing of nearly 85%.

The brutal selloff of November and December has received the most attention from investors because it followed a period of record stability for the digital currency. Bitcoin’s 30-day volatility index, which measures daily fluctuations in the spot price, fell in October to its lowest in nearly two years. Read more: Bitcoin Volatility Index Crashes to 22-Month Low. The sharp drop in volatility was also observed over longer time frames, including 12 days and 252 days, according to bitvol.info.

Despite claims to the contrary, the launch of bitcoin futures in December 2017 was positively correlated with the relative decline in volatility. This doesn’t mean bitcoin is no longer volatile; it merely suggests that institutional markets have had a hand in stabilizing the market. This was especially the case when bitcoin was priced near $6,000, a level that is widely associated with mining costs.

It remains to be seen whether the introduction of physically-settled bitcoin futures at the end of January will have a similar stabilizing effect. Intercontinental Exchange’s Bakkt trading platform is planning to release non-digital bitcoin futures with custody services on Jan. 24, pending regulatory approval. However, as Hacked recently reported, the launch date is likely to get pushed back further given the timeline for approvals by the U.S. Commodity Futures Trading Commission (CFTC). To learn more, read What is Bakkt? Preparing for the Physical Bitcoin Futures Market.

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