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Feb 232023
BTC/USDT: BTC Volatility Remains Under Control as Wall Street Panics
- The volatility of BTC has surprised traders by remaining relatively stable over the past few months.
- Indicators of stock market volatility on the other hand have been reaching yearly highs.
- Some analysts think it could be an indication of an upcoming price rally.
Bitcoin, as with most of crypto, is known for being pretty volatile when compared to traditional investment instruments. Its future is uncertain, and the space is (for the most part) still largely unregulated. Recently however, analysts have been noticing that BTC isn’t following its regular volatility pattern, and some think it could be an indication of an imminent bull market rally.
What’s going on with BTC volatility?
An index known as the Bitcoin Volatility Index (BVI) has shown that its volatility has remained almost flat – near the bottom of its range of three months. By contrast, the CBOE Volatility Index which measures volatility on Wall Street has surged since the beginning of the week – reaching this year’s high. The volatility in U.S Treasuries has also been on the rise recently – as Bitcoin investors seem to be remaining confident amid doubt in the stock market.
Some analysts think dissociation of Bitcoin volatility from that of the stock market might be to do with institutions losing interest in digital asset investment, and their mainstream appeal fading somewhat after 2022’s slew of disastrous crypto collapses. Many Bitcoin purists have long taken issue with the increased sensitivity of BTC to economic conditions, which came about with a wave of institutional adoption in late 2020.
What does it mean for BTC?
BTC has had flat volatility in the face of stock market volatility before, but some experts believe that this time could be different. Economic recovery and lowered inflation rates could result in a return to mainstream crypto adoption, which could cause a recoupling of the volatilities of the two worlds. Not only that, but Bitcoin is about to undergo its fourth halving (an event which halves the rewards for BTC miners) in just over a year’s time. Bitcoin halvings typically result in upward price movements before they occur every four years. Whichever direction it takes, the BTC/USDT pair could be one to watch in the months ahead.
Muhammad Asyfaul / Unsplash