Cryptocurrency enthusiasts may be noticing a surprising shift in market behavior; Bitcoin (BTC) and Ethereum (ETH) are demonstrably less volatile than oil. These two digital assets are seeing this unusual dropping trend in their volatility to “multi-year lows, slightly below oil prices,” as per new research from Kaiko. With Bitcoin’s 90-day volatility index at 35% and Ethereum’s at 37%, compared to oil price index at 41%, one can’t help but wonder what the underlying factors are.
Having been synonymous with volatility, Bitcoin and Ethereum faced significant troughs last year, losing over 55% of their respective market values. However, 2022 has shown immense promise with Bitcoin’s value surging 80% YoY, representing another leap in volatility.
This paradigm shift is attributed to various elements: geopolitical tension such as Russia’s invasion of Ukraine, leading to global sanctions, and the economic echo from China’s sluggish reopening after stringent Covid measures. Dessialava Ianeva, a lead analyst at Kaiko, pointed out that the maturation of Bitcoin has also played a significant role in the volatility break, as increased market adoption tends to stabilize asset prices.
Examining on-chain factors, decreased liquidity has also been highlighted as a contributing factor, with trading volumes for major assets, including BTC and ETH, hitting lows in recent months. The present regulatory climate, particularly in the US, has left investors uncertain and hesitant towards Securities and Exchange Commission’s (SEC) plans to approve a spot BTC ETF.
Despite the lull in momentum, there’s a silver lining on the horizon. The potential approval of a spot BTC ETF, while still months away, could serve as a catalyst, stoking the value of BTC and the overall market capitalization to new levels. Yet, this stride forward warrants a note of caution: while new highs may be welcomed by enthusiasts, the consequent attention might also steep the landscape into uncharted regulatory waters, thus injecting additional volatility to the market. Albeit a subtle undercurrent of skepticism, the wide consensus lauds it a prospective advance for the crypto market, setting an interesting stage for Bitcoin and Ethereum’s next exploit. After all, in the world of crypto, the only constant is change. Rest assured, every twist and turn in the crypto market will keep us, enthusiasts and skeptics alike, on the edge of our seats.
Source: Cryptonews
