Bitcoin (BTC) has been linked with extreme price volatility for years, which has deterred most investors. Bitcoin, however, seems to be less volatile than conventional investments like equities.
Bloomberg reported on August 13 that experts headed by Steven McClurg, the chief investment officer of digital-asset fund manager Valkyrie Investments, fear that the declining volatility and lower trading volume might indicate a long-term disaster for Bitcoin’s price.
As a result, McClurg anticipates a further increase in volatility, particularly as the leading cryptocurrency is pulled down by current macroeconomic difficulties.
In addition, Yassine Elmandjr, an analyst at ARK Investment Management, highlighted that low volatility at a time of low trading volume is not favourable for the leading cryptocurrency.
After months of remaining at 64% on an annualized basis, Bitcoin’s 30-day realized volatility has continued to decline, reaching 52%. At the start of the year, Bitcoin trade volume exceeded $100 billion. However, it has since dropped below $50 billion.
Notably, Bitcoin volatility has decreased at a time when the cryptocurrency market trades in tandem with the stock market. As global central banks continue to raise interest rates to combat surging inflation, the connection has surfaced.
The circumstance has forced the vast majority of crypto investors to forgo everyday trading. In the context of a down market, volatility has subsided as historical speculation looks to diminish.
In addition, Bitcoin’s weeks-long consolidation of around $20,000 has led some market participants to predict that the commodity has reached its bottom. In the meantime, the asset was trading at $18,700, a decrease of over 2% in the previous twenty-four hours.