Bitcoin’s (BTC) price has become less volatile than stocks, according to experts, however it has been unable to break the $20,000 barrier so far. Even while it sounds like a good thing for Bitcoin, some crypto traders don’t think it is when volume is low. Over the past two weeks, trading volume has plummeted from $40 billion to below $20 billion.
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The volatility of bitcoin (BTC) has decreased significantly when compared to the volatility of the U.S. stock market.
There has been a significant decrease in Bitcoin’s (BTC) 30-day realised volatility, as reported by Noelle Acheson, author of the “Crypto is Macro Now” newsletter. Realized volatility has decreased to around 52% on an annualised basis, according to data from Coin Metrics, down from 64% the previous month.
At the same time, Jake Gordon of Bespoke Investment Group reports that the BitVol volatility index has hit a new low, dropping from nearly 110 in May to 69 now. CoinMarketCap’s stats show a precipitous decline in trading activity, as well. Over 6% of the volume, or nearly $25 billion, has been traded away in the last two days.
While minimal volatility is generally viewed favourably in the stock market, it presents a challenge for Bitcoin due to its low volume. Swing trading, which takes advantage of short-term price fluctuations in Bitcoin, is the primary reason why traders enter the market.
The following is a quote from Yassine Elmandjra, an analyst at ARK Investment Management:
Even if it’s on a modest volume, low Bitcoin volatility isn’t usually a good thing to see. As a result, while low volatility may be an indicator that Bitcoin is becoming less exciting and more mainstream, low volatility on low volume may be bad for Bitcoin.
After taking a hit from the Terra-LUNA crypto crisis and the DeFi liquidity crisis, the cryptocurrency market is still feeling the effects of the Federal Reserve and other central banks increasing interest rates to combat inflation. Institutional investors, among those who once supported cryptocurrencies, have pulled their money out of the market.
The BTC Price Is Feeling the Heat
Due to low activity and U.S. aggressive rate hikes, the price of bitcoin (BTC) has been unable to break the $20,000 barrier. Nearly the past week, the BTC price has dropped by over 7%.
Along with that, BTC loses its early gains and drops below $18,695 before the release of U.S. CPI statistics. People may begin pulling money out of the market if the Fed keeps raising rates. The combination of low volume and low volatility will lead to more Bitcoin price drops.
Source: Google Trend