Bitcoin and other cryptocurrencies continued to languish at depressed levels on Tuesday, with measures of volatility across crypto at historic lows. Bulls say it’s a good sign—but there’s a case to be made that the opposite is true.
The price of
Bitcoin
has fallen less than 1% over the past 24 hours to $29,150, remaining below the psychologically important $30,000 level that provided support for the largest digital asset for months before it slipped below that mark in late July.
“Market volatility has been comparatively low over the most recent two-week period, reflected by the Bitcoin 10-day realized volatility falling, nearing volatility levels below those typically seen in equity, bond and gold markets,” said Matteo Greco, an analyst at digital asset investment group Fineqia International.
Bitcoin has been remarkably stagnant in recent weeks, even as the stock market has proved volatile with sizable moves for the
Dow Jones Industrial Average
and
S&P 500.
One measure of Bitcoin’s volatility—24-hour period historical volatility or BVOL—hit its lowest level ever last week, according to analysts at crypto exchange Bitfinex.
“There’s a historical precedent suggesting that when the BVOL 24H metric drops to low values and begins a sideways trajectory, it often heralds a significant price movement for Bitcoin,” the Bitfinex analysts wrote in a note this week. “The slight rise we currently observe, following such a lull, might be reminiscent of previous scenarios, potentially foreshadowing a substantial and volatile shift in Bitcoin’s price trajectory.”
Crypto bulls have propagated this argument for a while: that such a period of low volatility is ultimately good for Bitcoin because it suggests that a new bull market is stirring up. But there is reason to believe the opposite is true.
Bitcoin needs buyers to keep prices moving higher. While low volatility might be attractive for institutional investors, adoption of digital assets by financial giants has been crypto’s “Waiting for Godot” for years now—i.e. don’t get your hopes up. Though financial stalwarts like
BlackRock
(ticker: BLK) and Fidelity have moved further into crypto business lines this year, the holy grail of pension funds and insurance companies remains well on the horizon, if not out of reach.
That leaves retail investors. And all signs point to retail heading for the hills amid the bear market that has gripped crypto for the last year and a half. Trading volumes are down big time at
Coinbase Global
(COIN), with retail investors increasingly turning to more volatile tokens in a bid to get the rush that Bitcoin once delivered. Crypto traders want excitement. Bitcoin might need to be volatile to attract the class of buyers it needs to push prices higher.
Beyond Bitcoin,
Ether
—the second-largest crypto—has declined less than 1% at $1,830. Smaller cryptos, or altcoins ,were muted, with
Cardano
and
Polygon
each down less than 1%. Memecoins were further into the red, with
Dogecoin
and
Shiba Inu
both shedding 2%.
Write to Jack Denton at [email protected]
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