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Cryptoverse: Bitcoin is no longer king of the swingers

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ANDRE FRANCOIS MACKENZIE-UNSPLASH

Bitcoins called many things. Noisy, deceptive, unclear, even fake. But never boring.

However, it has been awfully quiet lately.

The the king with swingers has been uncharacteristically treading water around $20,000 for several days and hasn’t dared to top that since June.

This spells trouble for traders and exchanges making profits bitcoin BTC=BTSP wild price falters and opens the door to its main competitor ether ETH=BTSP which is preparing to up its crypto game by moving to a meaner and more economical blockchain.

“Bitcoin is not dead, it’s just boring at the moment, so traders are already confusedthe king for alternatives,” said Martin Leinweber, digital asset product strategist at MarketVector.

Bitcoins According to the firm Coinglass, the 30-day average volatility – a measure of how its value changes over a period of time – fell to 2.7% from more than 4% in early July.

In 2022, this number remained firmly below 5%, even during the most turbulent months of the “crypto winter” of depressed prices – a contrast to the past five years, when even periods of lower volatility were followed by spikes of up to 7%.

Similarly, an index from CryptoCompare, which uses bitcoin futures contracts to gauge how much price is expected to change, is just over 77, down from 90 at the start of the year.

Bitcoin has experienced periods of reduced volatility in the past, often during periods of depression or falling prices, with price swings often returning as trading activity picked up.

However, this downturn may be different.

“It’s been a relatively long period of reduced volatility, it’s now beyond anything we’ve seen even in 2019, when those levels were around a quarter to a quarter and a half,” said Stephane Ouellet, CEO of the crypto derivatives provider. Financial FRNT.

AIR OVERDRIVE

MarketVector’s Mr. Leinweber pointed to the uptick in trading of ether and its derivatives as a side effect bitcoin subdued volatility.

Indeed, Ether is the #2 crypto with a market cap of around $190 billion compared to bitcoin $380 billion – up 50% since early July, while Bitcoin is flat.

Ether offers no more price drama; according to Messari, it is much less volatile, peaking at just over 2% in March 2020 during the worst of the COVID market crash.

Nevertheless, it is sothe king At the moment, there is a lot of buzz about cryptography as it stands on the brink of its “merger”, which is expected to finally happen later this month, when there will be a radical transition to a system in which the creation of new Ether tokens is much less energy-intensive. Read the story in its entirety

THE CRYPTO BURNT

For longer-to long-term investors in traditional assets such as stocks or bonds, narrower price swings may seem positive. But for many investors and the main cogs in Bitcoin and the crypto-economy, this is not the case. Exchanges, for example, make money by charging commissions for trades; when volatility falls, trading activity tends to evaporate.

For crypto hedge funds, which tend to trade on price swings, more stable prices also offer less chance of profit.

So what’s behind bitcoin falling volatility?

The first is the flight of investors from the broader crypto space, which means fewer people want to trade their coins.

Cryptocurrencies have had a rough year as investors shunned risky assets amid rising inflation, with Bitcoin down roughly 60% and Ether down 55%. Serious crashes in two major coins and the bankruptcy of a prominent lender have also undermined confidence in the sector.

The 7-day value of Bitcoin trading volume on major exchanges ranged from $127 million to $142 million, according to data from Blockchain.com, the lowest level since October 2020. Similarly, Bitcoin futures trading is at an all-time low. levels since November 2020, data from Block showed.

“The highest levels of volatility usually coincide with the highest levels of interest in crypto,” Ouellette added. “People get burned out and say, ‘I don’t care about crypto right now.'” – Reuters

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