The cryptocurrency market has always been known for its volatility, with dramatic price swings characterising the history of Bitcoin as well as Ethereum and other popular alt coins. In fact, it’s these wild peaks and troughs that have made it such an appealing prospect for many investors using trading platforms like Bit Compass 365, with seasoned pros knowing exactly when to swoop in and buy up stock and when to hold their nerve, potentially making some considerable gains further down the line by playing the long game.
So it comes as quite the surprise to learn that Bitcoin has been holding surprisingly steady in price over recent months, and its currently trading sideways – something that has been dubbed both ‘a blessing and a curse’ by industry experts.
According to Nigel Green – CEO of one of the world’s largest financial advisory, asset management and fintech organisations, deVere, the price of Bitcoin – the largest cryptocurrency in the world by market cap – is at a multi-year low, with many alt coins following suit. But for several months, prices have stayed relatively stable.
“The price of Bitcoin, the world’s largest cryptocurrency by market cap, is still hovering around $29,400 which is a major combat zone between bulls and bears,” he explains.
“Until recently, crypto was typically characterised for its wild price swings. But in recent months it’s been trading pretty flat, which is both a blessing and a curse for investors.”
Without the sudden price plunges that often see seasoned investors buying up huge amounts/ of stock when amateurs, unnerved, hurry to sell – and the impressive spikes that often see those same experienced investors raking in the returns later on – crypto might not now seem as appealing a prospect to some.
But as the cryptocurrency market matures, this unprecedented sense of stability is proving – Green says – “crucial for its integration” into traditional financial systems.
“This newfound stability attracts institutional investors, who have been historically wary of entering the market due to its extreme price swings,” he says.
“This stability is also a boon for businesses and consumers looking for a reliable store of value or medium of exchange.
“As Bitcoin’s price becomes more predictable, it becomes a more viable option for everyday transactions. Businesses can confidently accept Bitcoin as a payment method without the fear of losing significant value between the time of purchase and conversion to fiat currency.”
There’s no denying that when it comes to mainstream adoption, such stability is likely to serve Bitcoin and co well, but on the flipside, this unexpected reduction in volatility has raised concerns amongst investors seeking the kind of quick, higher risk, higher reward opportunities that make them tick.
Without the rapid price swings that for many traders, were what attracted them in the first place, Bitcoin and its closest competitors have now lost some of their shine, with opportunities for substantial short-term gains now few and far between.
“For investors who thrive on volatility, the calmer waters of the Bitcoin market can feel limiting,” says Green.
“They must adapt their strategies to the new normal, focusing on longer-term trends and holding positions for extended periods. This shift can be challenging for those accustomed to quick turnarounds and constant market action.”
But of course, this could all be about to change again at any time, with the classic volatility crypto is known for likely to make a return before too long.
Until then, it’s still possible to capitalise on the benefits of Bitcoin’s stability whilst also mitigating the drawbacks, and to do so, taking a diversified approach is advisable.
Although sizable short-term gains seem to be off the table at present, the good news is that the risk of significant losses is also lower than usual. So, if you’re prepared to play that all-important long game then it’s likely still a good time to buy up Bitcoin, particularly with prices remaining relatively low.
As for the deVere CEO himself, Green admits that he is personally still very much invested in Bitcoin, and sees a promising performance ahead in the long-term. Earlier this month, he said that he would be continuing to put his money into the cryptocurrency over the summer months, alongside other investments.
He said: “Not only does Bitcoin remain one of the best performing asset classes of the decade, but I also believe its performance will further strengthen. Both institutional and retail investors are increasingly seeing the value of a digital, global, borderless and tamper-proof currency and store of value.
“This trend will increase as adoption picks up further and as confidence grows again in the global economy.”
It certainly sounds promising, and it’ll be music to the ears of many crypto investors who aren’t quite ready to give up on Bitcoin.
Should the US financial regulator approve spot Bitcoin Exchange-Traded Funds (ETFs) this year then this will signal a return to the classic market volatility we’ve seen before, and it’s thought that the US Securities and Exchange Commission (SEC) could imminently give the green light to a swathe of applications from various major asset managers.
Green says: “Should the SEC approve these filings, I expect the Bitcoin price will skyrocket.”
However, in the long-term, deVere believes that current market stability we’ve been seeing can only be a good thing.
“While the lack of short-term volatility can be frustrating for some investors accustomed to making quick returns, in the longer-term it will help drive sustainable price growth.”
Disclaimer: Investing money carries risk, do so at your own risk and we advise people to never invest more money than they can afford to lose and to seek professional advice before doing so.
