Bitcoin is experiencing its longest period of price stability in months, a trend that could help allay concerns that the digital currency is just too volatile to be of much mainstream use.

Starting in October, Bitcoin began experiencing almost violent price swings, driven largely by a run-up — and just as soon, a free fall — in Chinese demand. In December, the People’s Bank of China banned financial firms entities from handling Bitcoin, severely restricting the ability of BTC China, the world’s largest exchange, to operate.

The volatility charge has been cited even by retailers who now accept Bitcoin. Overstock.com, for instance, immediately converts its Bitcoin holdings into USD through Coinbase to avoid pricing risks.

“Until we can hedge through some kind of derivative instrument, we don’t want to take that direct exposure,” Overstock CEO Patrick Byrne told BI recently.

But Bitcoin price charts show volatility has seriously deflated in January. And that’s despite numerous negative opinions on the digital currency from Malaysia, Russia, and the world’s largest Nordic foreign currency trader — and despite the arrest this week of a major Bitcoin player.

Here’s what prices have looked like on Mt. Gox this month. The price this morning was about $US930.

The average Bitcoin price across all USD-traded exchanges is in fact $US825. But the January stability can be seen here too.

This is all relative of course — Bitcoin still usually moves in increments of 1% to 2% today. And it would be foolish to predict how long this period will last. China could yet ban Bitcoin outright. There are also signs that the world’s largest tech firms are inching toward implementing digital currencies into their retail units, which would cause prices to surge again.

But this month has provided evidence that there’s nothing inherently unstable about Bitcoin.

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