In a recent report published in ‘The Bitcoin Monthly,’ by Ark Invest, an American asset management company led by Cathie Wood, revealed that Bitcoin’s 90-day price volatility index has reached its lowest level since 2017. The report suggests that this decrease in volatility could potentially lead to significant price fluctuations in the near future.
The report also highlighted the Profit and Loss (PnL) index of short-term Bitcoin holders, which remains close to 1. This indicates that many investors are currently hovering near their breakeven points, suggesting a prevalence of speculative behavior among recent market participants. Historically, similar indicators have coincided with trend reversals and rebounds after short-term corrections during bullish market cycles.
Moreover, Ark Invest’s report from the previous month shed light on the increasing interest of institutional investors in Bitcoin, particularly after the BlackRock spot Bitcoin Exchange Traded Fund (ETF) went public. The surge in OTC Bitcoin balances, often serving as a proxy for institutional activity, further supports the notion of growing institutional involvement in the cryptocurrency.
The combination of reduced volatility and mounting institutional interest holds intriguing possibilities for the cryptocurrency market. While the current low volatility may provide some respite to existing investors, it also indicates a potential buildup of momentum and tension, hinting at possible significant price movements in the future.
As institutional investors continue to explore the potential of Bitcoin as an asset class, their presence in the market could potentially bring greater stability in the long term. With more substantial financial entities participating, the market may experience a newfound sense of credibility and legitimacy, potentially tempering the extreme price swings that have been a hallmark of Bitcoin’s past.
Source: https://azcoinnews.com/ark-invest-bitcoins-90-day-price-volatility-reaches-historic-lows-since-2017.html
