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February 14, 2014, 07:52:49 AM |
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So far, overall long-term volatility of BTC price has been going down. For the 2011 crash, the ratio of the bottom following the peak to the peak preceding the crash was about 0.0625. In spring 2013, from 266 USD to about 40 USD gives a ratio of about 0.15. For the current time, we know the peak but not the bottom.
If the ultimate severity of the correction is the same now as it was in spring, we would bottom out at about 180 USD (Bitstamp). If decreasing volatility is still a valid trend, though, the correction should be less severe. How much less severe? No way to know. Two data points isn't much to work with, but I thought I'd write this down just to see afterwards how things turned out.
In percentage points, the change in the bottom-to-peak ratio defined above was 8.75. (0.15-0.0625). The same change now would give a ratio of 0.2375, meaning a bottom around 285 (Bitstamp)
On the other hand, the 2013 ratio was 240% higher than the 2011 ratio. If this were to be true for the current crash, then the bottom-to-peak ratio would be 0.36, with a bottom around 432 (Bitstamp again.)
Again, not a prediction, but a few price points for comparison when considering overall volatility. This is pretty flawed thinking in many ways, as I'm not considering time at all here, and also am only looking at downward volatility. Still, if we bottom out above the 430s on Bitstamp, the overall reduction in intra-crash volatility will have been greater than before.
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