During Bitcoin’s recent price rally which saw it climb to an all-time high of almost $67,000, volatility measured over 260 days dropped to around 66.
Volatility has been a part of Bitcoin and the crypto market’s journey since its debut as price swings have over the years defined the status of the digital coin. Bitcoin usually experiences these price swings when new highs are reached, of which this year has been no exception. Despite Bitcoin’s impressive performance this year which saw it touch new highs, it has also experienced one of the wildest volatility phases this year including its 7% price drop within five minutes last week.
However, according to Mike McGlone, a Bloomberg Intelligence commodity strategist, Bitcoin’s price action, this year suggests that the digital coin might have moved past its usual history, especially the market’s four-year crypto cycles as “it appears the gyrations are diminishing if you take a longer view.”
Mike McGlone attributed his claims to a natural maturation and the influx of institutional adoption, citing the US launch of the first Bitcoin futures exchange-traded funds last month. During the Bitcoin recent price rally which saw it climb to an all-time high of almost $67,000, volatility measured over 260 days dropped to around 66. These levels were unseen since May when Bitcoin dipped under $40,000.
Dan Morehead, CEO and founder of Pantera Capital, also shared the same sentiments last month, stating that he thinks Bitcoin’s extreme volatility could be a thing of the past. Morehead revealed that the previous price cycles that investors have grown accustomed to are over, adding that the market will see less volatility, on both the upside and downside.
Morehead also attributed the change of pattern to the greater institutional adoption in the crypto space. “Deep bear markets like the one in 2018 that saw crypto assets shed over 90% of their value are a thing of our primordial past,” he stated. The Pantera CEO also asserted that investors “probably won’t see any more of the 100x-in-a-year rallies either.”
“The first halving reduced the supply of new Bitcoin by 15% of the total outstanding Bitcoin. That’s a huge impact on new supply and it had a huge impact on price. Each subsequent halving’s impact on price will likely taper off in importance as the ratio of reduction in the supply of new Bitcoin from previous halvings to the next decreases,” Morehead told reporters.
Bitcoin at press time was trading at $62,100 as bulls are now trying to achieve the third successive weekly close and the first-ever monthly close above the $60,000 barrier. Bitcoin could retest the all-time high ($67,000) and rally toward the ‘pattern target’ at $89,476 if its price rebounds off the 20-day EMA as bulls will make one final attempt to thrust the pair above the flag.
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