Considered one of the most volatile asset classes in existence, cryptocurrencies have been in a fairly deep sleep state since May 2022 Central banks around the world started raising interest rates to thwart the effects of high inflation.
Major cryptocurrencies such as Bitcoin BTC/USD have been emblematic of this trend, correcting over 70% from all-time highs and currently trading at critical support levels.
In comparison, the S&P500 index is down almost 25% since its recent peak and has outperformed Bitcoin over the same period.
Yet, with Bitcoin’s 30-day volatility and daily trading volume falling to levels last seen in December 2020, crypto investors seem confused by the price volatility action.
To make matters worse, more than 20% of companies included in the S&P500 index have shown greater volatility than bitcoin without the same drop in valuations that the world’s largest cryptocurrency has seen over the past year.
Also read: Ethereum liquidations have reached $759 million since the merger. What lies ahead?
But isn’t lower volatility better for Bitcoin and other cryptocurrencies?
In general, asset classes exhibit low price volatility when consolidating at key resistance or support levels. This means trading activity is maturing, with weaker hands giving way to investors with greater risk tolerance and a more positive outlook on future upside potential.
However, when combined with other parameters such as the overall trend, daily trading volumes and retail investor participation, a more complete picture can be obtained.
In the case of Bitcoin, the trend has been extremely bearish over the past 10 months, with each surge sold multiple times.
In terms of trading volume as well, Bitcoin’s average daily trading volume is a far cry from what was recorded in 2021. Combining both factors, it is easy to guess why private investors…
