Bitcoin (BTC) Price Volatility Sees New 17 Month Record Lows Signaling Crypto Market Maturity
Bitcoin’s volatility has reached new 17-month lows. This can be explained by different factors such as slow news cycle and low trading volume. At the same time, this could be a very positive signal since it could be related to Bitcoin and cryptocurrencies maturing. However, some investors are asking whether a stable Bitcoin is a positive sign for its future and the future of the space.
Bitcoin has been ranging between $6,400 and $6,800 in the last two months with a small period in which Bitcoin surpassed $7,000 dollars. This is very curious. There are some investors that have been trying to call Bitcoin a real stablecoin. Nonetheless, it is important to mention that Bitcoin has been working as a hedge for those investors trading altcoins. In the last months, when altcoins started to fall, Bitcoin capitalized an important part of these funds and its dominance grew to new highs in over a year.
For example, Nigel Green, DeVere Group founder, said that price stability could be related to a cryptocurrency market that is maturing.
Bitcoin will soon have ten years, but the craziness for it started back in 2016/7 when the price of the most important cryptocurrency started to grow. With this price increase, an important number of companies and users started to care about the virtual currency market. Additionally, new enterprises decided to invest important sums of money in infrastructure and more.
Mike McGlone, a commodity strategist at Bloomberg Intelligence said that the market is rapidly maturing and this is creating more stable prices.
About it, he mentioned:
“This is a maturing market, so volatility should continue to decline. When you have a new market, it will be highly volatile until it establishes itself. There are more participants, more derivatives, more ways of trading, hedging and arbitraging.”
David Tawil, president of ProChain Capital, shares the same opinion as McGlone that Bitcoin markets are maturing. He explained that as long-term buyers enter the market, there will be less buying and selling momentum.
Tawil says that the community that is currently buying are individuals that think and plan their investments for the long term and for a long period of time. This is also leading to a decline in short-term investors that are trying to make quick gains buying and selling at all times.
With a more mature market, there will be fewer investors that are searching for volatility. This would create a circle in which less volatility will also create negative incentives for daily investors to continue increasing volatility levels.
“Volatility and volumes are two sides of the same coin. When speculators are involved, they drive usually high volumes as well as volatility by trading the asset with high frequency,” says Gil Luria, director of research at D.A. Davidson & Co. “As speculator involvement is diminished, volumes go down and volatility goes down as well.”
In the next months, with important announcements to be made, Bitcoin could start to see a new volatility period. Its price could start increasing from current levels since the U.S. Securities and Exchange Commission (SEC) is planning to approve a crypto exchange-traded fund (ETF).
Furthermore, the Intercontinental Exchange (ICE) is also planning to launch its platform specifically designed for institutions that is known as Bakkt. Perhaps, Bitcoin’s parabolic days are over… at least for a short period of time.