How Resilient is Bitcoin?
The world of cryptocurrency is always changing, with new projects, ideas, and the news flowing through the space at all times. However, one of the best draws of the recent price action in Bitcoin and altcoins is actually the absence of big changes. There has been a lot happening in the spaces surrounding crypto, but most of the major coins have spent the last few months in one of a couple of different price ranges.
Steady Growth vs. Rapid Rises?
Crypto investors often express frustration when price action seems stagnant. The action of “crabbing” or drifting up and down in a narrow price range doesn’t seem to create many opportunities for profits besides trying to get lucky on daily swing trading. Many investors would prefer to see a steady rise or a consistent drop that they could use to open long or short positions.
However, outside of the narrow perspective of traders, there are a lot of reasons to be glad that the price action has been this steady. Consider all of the events and forces that have pushed Bitcoin and other coins around in the recent few months. News about problems at the Binance exchange and its legal problems have raised a lot of concerns about whether that exchange can continue operating and the safety of coins stored there. Risks to prominent exchanges can cause major problems with crypto trading and transactions. The lack of a major reaction in the price shows that Bitcoin and alts are maintaining some resilience in the face of this kind of news.
Emerging Crypto News that Might Impact Bitcoin
The same goes for other topics. Another emerging story recently has been the growing scrutiny of Tether. Tether accounts for a lot of crypto-related transactions, and several major exchanges depend on Tether. As with Binance, a threat to Tether poses a significant risk to the greater coin ecosystem for complex reasons, and yet the price of major coins has not moved notably in response to the Tether news.
China’s mining crackdown, rumblings that the US government will move to regulate crypto more directly, and other small news stories also had the ability to potentially shift the price action in crypto, but they have not had a notable impact.
The Maturity of Cryptocurrencies as Assets
One of the most important steps that crypto has to take is maturation. The space has to move past memes, scams, and gimmicks to become a truly mature asset class that can get notable institutional buy-in and support as well as broader acceptance with retail investors. Lower volatility is a good indication of that kind of maturity. An asset that swings up by huge amounts and then back down afterward on a frequent basis is risky and low-value both as an investment and as a medium of exchange.
It is also not a good look for crypto to constantly be in the news for swings and volatility rather than for its other qualities and its long-term outlook. Moving past the stage of a young asset class that can swing at the drop of a hat is a key transition point.
The price action in crypto is always hard to decode, so it is not clear how long this period of low volatility will last, so there could be more high-volatility periods ahead. Think about what high and low volatility mean for crypto and consider the implications for future price action and adoption over the next year or so. You can then rethink your position on volatility and whether you should prefer high or low volatility based on that, especially when it comes to the future of Bitcoin as a potential replacement for other currencies and day-to-day transaction use.