Since the market value reached a peak of approximately US$3 trillion in November last year, cryptocurrencies have been in volatility. The volatility of cryptocurrencies can be described as “notorious”, which is one of the reasons why many institutions and retail investors avoid it.
As the cryptocurrency with the largest market value, Bitcoin is a typical representative of high volatility. After staggering into 2022, Bitcoin’s trading price fell below the average price of the past 200 trading days this Monday. After Monday’s decline, Bitcoin rebounded by 3.3% on Tuesday; as of press time, Bitcoin fell 0.65% to $46,616.54 per coin.
However, in 2022, the volatility of cryptocurrencies may decrease. An analyst from the American investment company Bespoke Investment Group said: “The most interesting result of cryptocurrency performance this year is the reduction in volatility, whether it is rising or falling.” Lower price volatility may disappoint professional traders, but In terms of cryptocurrency, its investor base will expand.
JJ Kinahan, chief market strategist at TD Ameritrade, said:
“For most people, if an investment tool has incredible volatility, it is difficult to become a trustworthy long-term financial investment tool. Too nervous or even unable to participate. So the more stable an investment tool like cryptocurrency, the more stable it can attract a wider range of investors.”
In the past month, Bitcoin has been hovering between US$45,000 and US$51,000. According to data from Arcane Research, Bitcoin’s recent poor performance has caused its share of the overall cryptocurrency market to drop to 39.5%, the lowest level in the past three years.
However, Bitcoin’s recent decline may be reversed, and its price may be about to rise again. Bitcoin’s historical volatility in the past 30 days is the lowest level since September last year, and its price has shown short-term signs of exhaustion. The so-called Demark sequence indicator shows that above the support level of $43,295 to $44,500, a “9-13-9” pattern has appeared; and this support level is Bitcoin in June-November last year. Formed in that wave of rally.
Katie Stockton, founder and managing partner of Fairlead Strategies, a research firm focused on technical analysis, said that Bitcoin’s support level may be at $44,156, but the closing of Bitcoin above $46,334 on Tuesday confirmed a closely watched one. Counter trend signal. She said that if this happens, Bitcoin may experience an oversold rebound and once again test the price level of $55,644.