Cryptocurrency skeptics have always insisted that the reason Bitcoin and the other cryptos could never be used for mainstream payments was their never-ending volatility. With some of the cryptos gaining over 50 percent overnight over the past year and then dropping it the next day, the skeptics were proven largely right. However, the tides have changed. Bitcoin has maintained its price at the $6,600 range in what has been the least volatile week for the king of crypto in over a year. The other cryptos have been largely stationary as well, with Ethereum hovering around $230 and Bitcoin Cash staying just above $500. Has the market finally found its place or is this the eerie calm just before a storm?
The Calm Before The Storm
In the past, the crypto market has had two opposite but equally strong forces that determine its movement; the bears and the bulls. These two have dictated the direction the price moves, with the bears pulling the price down as the bulls push it forward. Some have resulted to underhand tactics just to have their way, such as bears who have used bots to make wash trades that are never fulfilled but which significantly push the price up. However, over the past few days, it seems both these factions have stayed away and the market is slowly finding a narrow range of operation.
Over the last 30 days, Bitcoin’s volatility index has stood at a paltry 1.57 percent according to data from Buy Bitcoin Worldwide. This is an 80 percent drop from its January volatility index which stood at 8.6 percent. This is the least volatile Bitcoin has been since around July last year, months before the market blew up at the end of the year.
The low volatility is being interpreted differently by different crypto analysts. The first is that the bulls and bears are staying on the sideline and this has left the market largely to small scale traders as well as those using cryptos for transactional purposes. This group is not as large and only conducts small trades which don’t affect the price as much. As stated by Bob Mason, a financial expert at FX Empire, “Bitcoin looks to have settled into a long-term relationship with its investors, who are not speculating their days away and appear to be in it for the long haul.”
With price manipulation having been a great concern for regulators globally, the low volatility could give them confidence on the maturity of the industry. The U.S Securities and Exchanges Commission has been one of the most vocal in condemning the price manipulation which is illegal in the stock market, citing it as the main reason it rejected the Bitcoin ETF applications. With Bitcoin now being less volatile than the traditional stocks, the SEC might soften its stand on the Bitcoin ETFs.
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