The positive start to the year for the Bitcoin price has been making the headlines as the asset first closed a successful January, and then managed to cross over $10,000 on Sunday, February 9. This, of course, has sparked investor interest, but another factor should also be considered.
Bitcoin’s famed volatility is also down near record lows. While the cryptocurrency’s volatility was one aspect that brought it to fame and helped it reach a high of $20,000, the more mature asset nowadays thrives under low volatility.
According to a chart from Skew (@skewdotcom) Bitcoin is up 35 percent year-to-date, and it’s at a similar level as April 2019, just before the ‘Crypto Spring’ started taking root. This makes the asset’s investability very attractive in current circumstances.
— skew (@skewdotcom) February 11, 2020
The Problem With Bitcoin Volatility
Bitcoin’s volatility has long been a double-edged sword for the growth and adoption of blockchain and cryptocurrency. It is unlikely that Bitcoin and the entire ecosystem would be where it is at the moment if it wasn’t for the crazy price volatility seen through 2017.
This price action of mostly upward movements captured the mainstream media’s attention and Bitcoin was suddenly on the lips of every individual wanna-be investor. The interest at this level was strong enough to cause a parabolic price bubble, which then alerted people to the other side of volatility as the price crashed.
Nowadays, Bitcoin’s volatility is far less aggressive, despite the odd 40 percent jump in a single day, and this is a positive development for the market which is now attracting institutional investors who are much more cautious.
As Skew states above, this steady price gain coupled with record-low volatility presents an investment opportunity especially for those with deep pockets – the institutions.
Marketing to Wall Street
It has been observed that part of Bitcoin’s dampening volatility may have to do with increased institutional interest. These big-money players are now what is needed to shift the needle in regards to Bitcoin’s price whereas before, a frenzy of individual interest was enough.
The metaphorical Wall Street interest in Bitcoin is what will be needed for the asset to break into new price action, but this interest will not come if the coin continues to rise and fall with drastic moves.
Bitcoin is becoming more normalized and legitimized, with even central banks examining the technology to create their own versions. With that, Bitcoin is likely to benefit from renewed interest from banks and governments, and this will ease institutions into investing in the asset as well as the current investible conditions.