Bitcoin's 'Strange' Two Months
The famous super volatile asset like Bitcoin has experienced a period of relatively stable market prices, despite the turbulent world economy.
Data compiled by Bloomberg at the end of May shows that the world's largest digital currency has not changed more than 6% in price in 70 sessions. This is the longest string of calm since October 2020. Observers say this is unusual for Bitcoin , which is known for its price often going up or down sharply, sometimes reversing just a day later.
Last month, the cryptocurrency traded around $27,000. “When it comes to volatility, Bitcoin prices also only move up and down in the $26,600-27,500 range, one of the tightest trading ranges in the past few years,” according to analysts at Glassnode.
Since the start of the year, the cryptocurrency has increased by more than 60%, from around $18,000 to over $27,000 at the end of May. However, Bitcoin has been stuck in a tight range for the past two months, fluctuating between 26,000-29,000 USD. At one point, Bitcoin surpassed $30,000 but also faced several drops to $25,500. Overall, the 30-day volatility of the Bitcoin price is also at lows not seen since early January.
According to CCData, Bitcoin’s volatility has dropped to 48.2% this year from 62.8% last year and 79% in 2021. The cryptocurrency’s average daily change has remained steady, with average increase 1.68% and average decrease 1.93%.
Strahinja Savic, head of data and analytics at FRNT Financial, said traders are waiting for more clarity in negotiations over the debt ceiling or the Federal Reserve's interest rate policy. (Fed). This is their moment to wait and see.
American politicians are arguing over how to resolve the public debt deadlock when the process is protracted. Meanwhile, minutes from the most recent Fed officials' meeting showed policymakers were uncertain how much more policy tightening would be needed to further slow inflation.
According to expert Noelle Acheson, although Bitcoin's upside potential is quite large, there is currently not enough compelling reason for investors to pour money in. On the other hand, there is not much reason for existing holders to sell. The macro backdrop is leaving investors waiting to see how things play out.
Speaking to Cointelegraph , David Duong - head of institutional research at Coinbase - suggested that crypto prices holding steady was partly driven by the strong pullback in the USD . This is constructive for Bitcoin and the crypto market in general over the next 6-12 months.
And CoinDesk said that investors were "bored" with macro fluctuations. In the face of banking industry instability, the ongoing conflict between Russia and Ukraine, a 25 basis point interest rate hike in May, a looming global recession, and the US public debt war, financial Digital assets seem to have "lost interest" to it all. These traditional stories can only have an impact on traditional investors.
However, CoinDesk expert Nathan Cox noted that Bitcoin's recent lull could lull market participants into a "false sense of security". "As the winds of macroeconomic change continue to blow and underappreciated narratives begin to play out, we could see volatility ramping up again," he said.
Tieu Gu (according to Bloomberg , Cointelegraph , CoinDesk )
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