The Stabilizing and Volatile Nature of Bitcoin

Bitcoin Rarely Seen as Stable

Cryptocurrency, particularly Bitcoin (BTC), has gained a reputation for extreme volatility. However, the past month has been surprisingly different. On July 1st, Bitcoin was priced around $30,300 and ended the month at approximately $29,200. K33 Research, a crypto research company formerly known as Arcane Research, compared these price movements to the New York-based Nasdaq stock market, the American stock index S&P 500, and gold.

Investigating Bitcoin’s Behavior

K33 Research conducted an analysis and found that Bitcoin exhibited less volatility compared to the aforementioned traditional investments, which is quite rare. The research specifically focused on the 5-day volatility of BTC – a statistical measure of price fluctuations over a 5-day period. Additionally, the 30-day volatility is hovering around a historical low not seen since January 2019.

Predicting the Future Stability

Historically, Bitcoin does not tend to maintain periods of stability for long. Therefore, it is expected that a period of high volatility will follow soon. The figure below illustrates the relatively short duration of stable periods for BTC. According to Vetle Lunde, a senior analyst at K33, Bitcoin will reach a turning point in the short term as volatility pressure reaches its peak and an eruption becomes imminent.

Factors Influencing the Burstiness

Various factors can trigger either an upward or downward burst in Bitcoin’s volatility. One influential factor could come from the Securities and Exchange Commission (SEC) in the United States. If the SEC approves Bitcoin exchange-traded funds (ETFs) applications, such as BlackRock’s ETF, it could initiate an upward price movement. Conversely, a potential new lawsuit from the SEC could have the opposite effect. Troubles regarding the macroeconomic situation or crypto exchanges could also act as negative catalysts.

For now, it seems unlikely that the price will remain on the same trajectory for an extended period. Whether the price goes up or down remains uncertain.