Bitcoin Volatility Reaches More-Than 2-Year Low As 2022 Comes To A Close

Bitcoin volatility has been relatively subdued lately as the digital currency trades within a reasonably narrow range. A short-term measure of these fluctuations recently hit its lowest in close to 30…

Bitcoin Volatility Reaches More-Than 2-Year Low As 2022 Comes To A Close

Short-term bitcoin volatility recently reached its lowest since 2020. (Photo by Nicolas ... [+] Economou/NurPhoto via Getty Images)NurPhoto via Getty Images

Bitcoin's price movements have been rather tame in recent weeks, and this relative calm has coincided with a specific measure of the digital currency's volatility reaching its lowest in over two years. The cryptocurrency's seven-day annualized volatility, determined by sourcing data from several exchanges, fell to 10.64% yesterday, according to figures provided by asset manager Blockforce Capital. Upon dropping to this level, this particular measure had hit its lowest value since July 20, 2020, according to additional data from Blockforce Capital. The aforementioned figure of 10.64% was far below the level of 56.85% that bitcoin's seven-day annualized volatility has averaged going back to 2013. [Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]

Further, it contrasts significantly with bitcoin's history of substantial price fluctuations, which have generated widespread media coverage as the cryptocurrency experienced compelling increases in value followed by sharp declines.

A perfect example was 2017, when bitcoin climbed from close to $1,000 to almost $20,000, CoinDesk figures show. While these compelling gains drew significant attention to the digital currency, they were ultimately unsustainable, and bitcoin fell sharply the following year, additional CoinDesk data reveals. In 2021, bitcoin once again experienced some impressive upside, approaching $70,000 late in the year.

However, the digital asset once again lost much of its value, dropping to a two-year low of less than $16,000 in November. After suffering these notable losses, bitcoin's price movements have been more subdued, and over the last few weeks, the cryptocurrency has been trading between $16,000 and $17,000.

This year has been characterized by significant turmoil in the cryptocurrency space, as markets have reeled from events like the the failure of troubled exchange FTX and algorithmic stablecoin terraUSD losing its peg to the U.S. dollar.

Amid these developments, bitcoin prices declined substantially, falling from close to $40,000 at the start of May to less than $16,000 last month.

Now that 2022 is coming to a close, it will be interesting to see what next year brings.

Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, EOS and sol.