The world is changing fast and to keep up you need local knowledge with global context.
Bitcoin volatility looks to return
Bitcoin faced a massive wipeout of value over the past few months as macroeconomic conditions such as inflation, potential recession and higher interest rates came into play. Multiple crashes within the crypto space from tokens such as Terra Luna to platforms such as Celsius Network and Voyager Digital also caused investors to pull out of the cryptocurrency market, tanking the price. And although it has remained stable at around $20,000, some historic economic indicators suggest there may be some more erratic volatility coming from the oldest cryptocurrency. More in this article from Bloomberg. – Ross Sinclair
Bitcoin Chart Pattern Brings Warning of Volatility Spike, Losses
By Akshay Chinchalkar and Joanna Ossinger
(Bloomberg) – An unusually placid Bitcoin may be girding for a pick-up in turbulence and a lurch lower, if history is any guide.
The world’s largest cryptocurrency is notorious for its volatility but has defied that stereotype by oscillating in a relatively constrained range around the $20,000 level in the four months since hitting a low in mid-June.
But now a potentially portentous indicator known as the Bollinger bandwidth has shrunk to the narrowest since 2020. The bandwidth is the gap between the upper and lower bands in a Bollinger study, a popular way of gauging volatility.
The bandwidth has been similarly narrow five other times in the past two years, according to data compiled by Bloomberg. On four of those occasions, Bitcoin subsequently shed almost 16% over 20 days. One time, back in October 2020, it embarked on a surge to a record high of almost $69,000.
Some technical analysts therefore view the tight Bollinger bandwidth as a harbinger of increased Bitcoin swings and potentially a drop in its price.
A global wave of monetary tightening to fight inflation has spurred a near 60% slide in Bitcoin this year. Some $2 trillion has been wiped off cryptocurrencies since a high in November 2021, prompting regulators to step up oversight.
“I still don’t think we will have a bullish run anytime soon,” said Cici Lu, chief executive officer of Venn Link Partners Pte. “All it takes is one piece of negative news to do with regulation and we could break through the bottom end of Bitcoin’s recent $19,000 to $24,000 trading range,” she said.
Global markets are also awaiting US inflation data due on Thursday. A hot number could strengthen expectations of more Federal Reserve interest-rate hikes, roiling a range of assets, while a material slowdown may work the other way.
“We expect Bitcoin’s price to be very macro driven in the near term,” said Darius Sit, co-founder of crypto investment fund QCP Capital Pte. “A break out of the recent range on either side would likely be triggered by something like a surprise in the CPI print.”
Bitcoin was little changed at about $19,450 as of 6:12am on Monday in London. Other coins like Ether, Solana and Cardano also struggled for direction.
© 2022 Bloomberg L.P.
- Do Kwon’s South Korean citizenship in the balance after Terra Luna collapse
- Are we close to the bottom of the cryptocurrency market?
- CrypTalk ep 8 – Why you should invest in crypto beyond the ‘greater fool’ theory
Cyril Ramaphosa: The Audio Biography
Listen to the story of Cyril Ramaphosa's rise to presidential power, narrated by our very own Alec Hogg.