Bitcoin Volatility Below Stocks: Benefit Or Bane? – Bitcoin (BTC/USD), Coinbase Global (NASDAQ:COIN) – Tech Tribune France

Considered one of the most volatile asset classes in existence, cryptocurrencies have been in a fairly deep state of slumber since May 2022, when central banks around the world began raising interest rates to thwart the impact of high inflation.

The main cryptocurrencies such as Bitcoin BTC/USD have been emblematic of this trend, with price correcting over 70% from all-time highs and currently trading at a critical support level.

By comparison, the S&P500 index has fallen almost 25% from its recent peak and has performed better than Bitcoin over the same period.

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Yet, with Bitcoin’s 30-day volatility and daily trading volumes falling to levels last seen in December 2020, crypto investors seem bewildered by its price volatility action.

Worse still, more than 20% of the companies included in the S&P500 index have shown greater volatility than Bitcoin, without the same drop in valuations that the world’s largest cryptocurrency has seen over the past one-month period. year.

Also Read: Ethereum Liquidations Hit $759 Million Since Merger. What awaits us?

But isn’t lower volatility better for Bitcoin and other cryptocurrencies?

Generally speaking, asset classes experience low price volatility when they consolidate at significant resistance or support levels. This means a maturing of trading activity, with weaker hands giving way to investors with stronger risk appetite and a more positive view of the potential for future price appreciation.

However, when combined with other metrics such as general trend, daily trading volumes and retail investor participation, it is possible to get a more complete picture.

In the case of Bitcoin, the trend has been extremely bearish over the past 10-month period, with each rise being repeatedly sold.

Also in terms of trading volumes, Bitcoin’s average daily trading volumes are a far cry from those recorded in 2021. Combining the two factors, one can easily guess why retail investors have been hit the hardest in terms of sentiment, with a study by crypto firm Grayscale Investments pointing out that 55% of Bitcoin investors started their journey in 2021.

This is supported by data from Coinbase Global Inc. PIECE OF MONEYone of the largest crypto exchanges by trading volume, which said only 24% of its entire trading volume in Q1 2022 came from retail investors.

Have Institutional Investors Been a Game Changer for Bitcoin?

Despite an overall drop in crypto trading volumes in 2022, the share of institutional investors has been on the rise for the past four quarters, according to results from Coinbase.

Even in the muted first quarter of 2022, institutional investors contributed 76% of the platform’s total trading volume.

Although data for individual cryptocurrencies such as Bitcoin is not available, it is fair to assume that similar percentages would be warranted for what is the most popular cryptocurrency in the world today.

Additionally, institutional investors are generally considered to be for the long term, as they tend to hold onto their assets, even during periods of high volatility or sharp price corrections.

This last aspect is what unfolded in the second quarter of 2022 when Coinbase quarter resultsr showed that Bitcoin accounted for 31% of all transaction revenue.

Bitcoin’s healthy share is a testament to the fact that while the entire crypto market is slowly going through this corrective phase, mature investors will continue to bet on Bitcoin, given its position as a top crypto.

And institutional investors are definitely holding onto their Bitcoin positions, even though their overall value has taken a hit in the recent past.

A rally in sight or a new fall?

Even crypto enthusiasts are spooked by the divergent price predictions circulating the internet today.

While crypto evangelists still stick to their “Bitcoin to $100,000 by December 2022” prophecies, technical analysis hints that the $30,000 mark is the first real hurdle.

Obviously, this is considering that Bitcoin is not falling below the $18,500 support level it has been honoring for the past few months, below which doors could really open for lower levels.

Although it is impossible to predict how Bitcoin or any other cryptocurrency might perform in the near future, it is important for investors and traders to monitor global financial markets for clues.

If inflation continues to rear its ugly head, the US Federal Reserve may be forced to continue its interest rate hike spree, pulling more liquidity out of risky asset classes such as cryptocurrencies.

On the other hand, any dovish outlook could spur a quick short-term rally, much to the delight of battered crypto investors. Either way, the ball is rolling and time will tell who will emerge victorious at the end of 2022.

Next: Will the Rise of Quantum Computing be a Threat to Bitcoin?

Don’t miss The future of crypto by Benzinga on December 7 in New York. Click here for more information.

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Bitcoin Volatility Below Stocks: Benefit Or Bane? – Bitcoin (BTC/USD), Coinbase Global (NASDAQ:COIN) – Tech Tribune France


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