By Shelly Melancon (Switzerland)
Following weeks of a strong bullish move, bitcoin is now on a retracement. The world’s first coin set a new record when it smashed its previous all-time high in October to reach a new high of $67,277. Since then, it has retraced to below $64,000 and currently trades at $61,863.76 after gaining 2.23% (as of press time). Bitcoin’s retracement is an expected price action as analysts expect the coin to consolidate before the predicted bullish move that will push its value to $100,000. On the weekly candle, it is showing market indecision learning towards a bullish run.
Since institutional traders entered positions with billions of dollars, the volatility of bitcoin was expected to soar beyond previous highs. Although its high volatility and constant price movement are two important factors for attracting investors, experts at Bloomberg believe that the entry of institutional traders is contributing to a gradual reduction in volatility, pushing bitcoin towards stability. Bloomberg agrees with previous warnings that as bitcoin matures, its volatility would gradually decrease. This removes its two greatest appeals as an investment asset; many investors prefer the risks of bitcoin’s volatile movement to the relative safety of stablecoins without the potential for earning more.
Investors Have Sustained Bitcoin Buy Orders
Since August when bitcoin began to muster strength after the May market crash, there has been sustained buying pressure on various exchanges. As experts predicted a stronger bullish move going into the close of the year, more investors sought bigger bitcoin stacks to increase their gains. But having pumped billions into the market, the coin’s 260-day volatility has now dropped to 66; its lowest since May. While lower market volatility does not automatically make the asset a stable coin, it does make it similar to stable coins in safety and is expected to attract more attention from traditional investors.
The decrease in bitcoin volatility may also impact the price action of altcoins as bitcoin has a history of pulling the market along its trend. But with the rise of more projects and blockchains, altcoins will need more than bitcoin’s influence to have better price actions.
For countries that have adopted bitcoin as a legal tender, the decrease in volatility will evoke mixed reactions; on one hand, it would mean increased economic stability but on the other, it means that the value of the coin may not grow.
Bitcoin Investments will Increase
Although only crypto whales such as Microstrategy are holding the larger number of bitcoins, regular investors now have access to bitcoin exposure following the approval of Bitcoin-ETFs on the US stock market. The SEC recently granted permission for ProShares and Grayscale to list their Bitcoin-ETFs. Over $1.7 billion worth of investment has been added to the cryptocurrency market due to that move.
In the US, bitcoin investments are predicted to increase as the Bitcoin-ETFs receive more attention from inventors. The crypto-ETFs offset the safest way for investors to hold investments without owning the underlying assets.
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