Forex in this article
• Bitcoin recently with significantly lower volatility
• The expert anticipates an increase in institutional investors
• Small fluctuations not only positive
One bitcoin cost US$68,990 at the end of 2021 – after that it quickly went down. The price of cryptocurrency has crashed in the wake of weak stock markets and geopolitical developments. Worries about the global economy, central bank policies, but also internal issues in the crypto market place the veteran among digital currencies – but also the majority of altcoins – under massive pressure. It went down to around US$18,000 within a few months. A slump that the crypto community has not experienced for the first time. Because Bitcoin & Co. has been very volatile several times in the past.
Recently, however, things have calmed down on the crypto front: Bitcoin has been moving sideways at around US$20,000, and there have been hardly any big swings in the market lately – except for the collapse of prices due to the bankruptcy of FTX.
Expert sees lower volatility as a good sign
Vijay Ayyar, International Head at Crypto Exchange Luno, says the recent predictability and stability of cryptocurrencies bodes well. “Bitcoin has essentially been hovering between 18,000 and 25,000 for 4 months, suggesting consolidation and a possible bottoming pattern as we also see the dollar index leading,” the analyst told CNBC via email.
According to him, there are signs of an accumulation phase in which institutional investors in particular are considering Bitcoin commitments. Even though the tight trading framework is making Bitcoin “boring” now, “smart money” is piling up as private investors increasingly lose interest.
This argument is supported by Matteo Dante Perruccio of digital asset management firm Wave Financial, who told CNBC that institutional investor demand for crypto has increased at a time when interest in traditional markets is likely to decline. lessen.
He was also convinced that the crypto winter could end in the second quarter of 2023, which he also justifies by consolidation and bankruptcies in the crypto sector: “We will be in the DeFi zone [dezentralisierte Finanzen] have seen a lot more failures, especially from many smaller players, which is absolutely necessary for the industry to grow.”
Lower volatility is not always positive
However, the fact that cryptocurrencies such as Bitcoin have recently fluctuated in value much less than usual can also have negative consequences. Because it is precisely retail investors and speculators who have helped the crypto market reach significant heights. If these groups of investors disappear as investors because they lose interest in lower fluctuations and the associated lower potential returns, this can also have a negative impact on the evolution of cryptocurrency prices – due to lower trading volume.
Steven McClurg, co-founder and CIO of digital asset fund manager Valkyrie Investments, recently pointed this out to Bloomberg. The expert calls low volatility combined with low trading volume “undesirable” in a bear market. McClurg warned that if the Fed raises interest rates further, this development could worsen.
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