On February 17, Bitcoin finally managed to conquer the $50,000-level. Having consolidated itself above this critical price level, it will be interesting to note just how far the price will go.
As of now, the industry experts seem to have different views on volatility.
What is price volatility?
Price volatility is a metric used to measure price uncertainty in the markets. A commodity or asset that goes through extreme price fluctuations Volatility is measured by the day-to-day percentage difference in the commodity price. The degree of variation, not the level of prices, defines a volatile market.
Is Bitcoin Going Through a Period of High Volatility?
This Tuesday, JPMorgan strategists led by Nikolaos Panigirtzoglou noted that unless volatility goes down, the $50,000-level "looks unsustainable." According to the researchers, the BTC market cap has risen by $700 billion since last September and institutional inflows are only around $11 billion. This is likely possible because of two reasons: increased interest from real money and speculative investors or higher retail inflows.
"Movements since January this year appear to have been more influenced by speculative flows. This also suggests that some pickup in real money flows would likely be needed to sustain current prices in the absence of a re-acceleration of the retail flow.....the US retail impulse has been particularly strong since January and there is little doubt that this retail impulse has been a driving force not only for equities, but also for bitcoin."
As per the JP Morgan team, Bitcoin and its biggest fund, Grayscale Bitcoin Trust (GBTC), consume 6.2x more risk capital than gold, making it a high-risk, high-reward style investment.
Willy Woo Disagrees
Noted Bitcoin Analyst, Willy Woo, noted that Bitcoin 60-day volatility is at 14.25%, less than half of what it had in the 2017 bull run (32%). Similarly, Bloomberg strategist Mike McGlone believes that growing institutional BTC adoption will force Bitcoin’s volatility below even that of gold.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.