Bitcoin throughout its short decade long history has been on a steady uptrend in price and in a secular bull market. But while price is rising, volatility has long been trending down.

But what are the reasons behind this trend, and what exactly does this mean for Bitcoin the near and long term?

Early Exponential Growth In First-Ever Cryptocurrency Leads To Diminishing Returns

The cryptocurrency asset class is a highly speculative set of digital assets known for wild price swings. The notorious volatility has long kept institutions away from Bitcoin, who prefer slower, more stable returns on investment through the stock market, and other long-term investment vehicles. But thanks to this speculative nature and wild price volatility, Bitcoin is the best performing financial asset ever.

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Its returns easily beat Amazon, Apple, and gold.

Returns diminish over time as the asset finds its true value and adoption increases. As this happens, the volatility Bitcoin is known for has started to decline. Top crypto analysts have been pointing out this trend for some time, and claim it is healthy for the long term growth of the first-ever cryptocurrency.

Bitcoin Volatility Continues To Decline, A Touch of Down Trend Line Could Act As Rally Peak

Relative volatility compared to the Nasdaq composite index has fallen to historic lows. The Bollinger Band Width is also signaling a sharp decrease in volatility over time. The Bollinger Bands indicator created by consists of a simple moving average and two standard deviations making up a top and bottom “band.”

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Most price action takes place within these bands, and the middle SMA line can be used as a buy or sell signal when price passed through. The tool is also used to watch for a squeeze in the bands, which often precedes explosive moves that cause a massive break in volatility stagnating. Bands widen or contract depending on price action. Spinoff indicators such as the Bollinger Bands Width give a better visual representation of overall volatility.

BTC Weekly: Spikes in the Bollinger Band Width have followed the down sloping orange trend line. Additionally, these spikes in the BBW have also perfectly aligned with peaks in price. Will this occur again? Another tool amongst many to keep an eye on. — Nunya Bizniz (@Pladizow)

According to Bollinger Band Width, each major peak in Bitcoin price has been repeatedly tapping a declining trendline. After each touch, volatility drops further until another attempt to hit the trend line happens. Bollinger Band Width is currently trending below the ever-important line, potentially signaling that a local top is near in Bitcoin. But before the leading cryptocurrency by market cap can touch that trendline, another spike in relative volatility and potentially another peak may be possible first.