Bitcoin, the original cryptocurrency, has long been known for its extreme price volatility. However, recent research by Kaiko Research suggests that this volatility is actually on the decline as Bitcoin continues to mature. Despite this long-term trend, short-term fluctuations are still prevalent in the market, as evidenced by the price swings observed last week.
Last week, Bitcoin experienced a rollercoaster ride in terms of price movements. Prices surged from $66,000 to nearly $70,000 in just a single day before settling back down around $66,600 by the end of the week. This represents a 4% dip in value for Bitcoin overall, driven largely by selling activity on major exchanges such as Binance and Bybit.
Despite the short-term price fluctuations, Bitcoin has shown signs of maturation in recent years. The research report highlights that Bitcoin’s historical volatility has remained below 50% since the beginning of 2023, a significant improvement from the extreme fluctuations seen in 2022 when volatility exceeded 100%. This indicates a more stable market environment for Bitcoin investors.
One key factor influencing Bitcoin’s volatility and market structure is the growing influence of the US market. The report notes that trading volumes are increasingly concentrated around the East coast trading window, with the US market close now commanding a higher share of these volumes. As a result, developments in the US market, such as the launch of spot Bitcoin ETFs, can have a significant impact on Bitcoin price movements.
In a surprising development, Blackrock, a $10 trillion asset manager, has surpassed Grayscale’s Grayscale Bitcoin Trust in terms of assets under management. This positions Blackrock as the world’s largest spot Bitcoin ETF, signaling a shift in the dominance of traditional asset managers over crypto-native investment vehicles.
While Bitcoin’s volatility may be decreasing over time, short-term fluctuations are still a reality in the market. The influence of the US market, as well as the emergence of new capital flows, continues to impact Bitcoin price movements. As the cryptocurrency market evolves and matures, it will be interesting to see how Bitcoin’s volatility and market structure continue to change.