Bitcoin’s lack of volatility lately isn’t a bad thing and could actually point to signs of a “bottoming out” in prices, analysts and investors told CNBC.
Digital currencies have fallen sharply since a scorching run in 2021 which saw bitcoin climb as high as $68,990. But for the past few months, bitcoin’s price has bounced stubbornly around $20,000 in a sign that volatility in the market has settled.
Last week, the cryptocurrency’s 20-day rolling volatility fell below that of the Nasdaq and S&P 500 indexes for the first time since 2020, according to data from crypto research firm Kaiko.
Stocks and cryptocurrencies are both down sharply this year as interest rate hikes by the U.S. Federal Reserve and a strengthening dollar weighed on the sector.
Bitcoin’s correlation with stocks has increased over time as more institutional investors have invested in crypto.
But bitcoin’s price has stabilized recently. And for some investors, that easing of volatility is a good sign.
“Bitcoin has essentially been range bound between 18-25K for 4 months now, which indicates consolidation and a potential bottoming out pattern, given we are seeing the Dollar index top out as well,” Vijay Ayyar, head of international at crypto exchange Luno, told CNBC in emailed comments.”
“In previous cases such as in 2015, we’ve seen BTC bottom when DXY has topped, so we could be seeing a very similar pattern play out here.”
Antoni Trenchev, co-founder of crypto lender Nexo, said bitcoin’s price stability was “a strong sign that the digital assets market has matured and is becoming less fragmented.”