Two 'strange' months for Bitcoin

The notoriously volatile asset class Bitcoin has experienced a period of relative stability in its price despite the turbulent global economy .

Data compiled by Bloomberg in late May showed the world’s largest cryptocurrency had not moved more than 6% in price for 70 sessions, its longest such streak since October 2020. Observers said this was unusual for Bitcoin, which is known for its price rising or falling sharply, sometimes reversing just a day later.

Over the past month, the cryptocurrency has traded around $27,000. "Whenever there is volatility, Bitcoin's price fluctuates within a range of $26,600-$27,500, one of the tightest trading ranges in the past few years," according to analysts at Glassnode.

Since the start of the year, the cryptocurrency has risen more than 60%, from around $18,000 to over $27,000 by the end of May. However, Bitcoin has been stuck in a narrow range for the past two months, fluctuating between $26,000 and $29,000. At one point, Bitcoin surpassed $30,000 but also faced several drops to $25,500. Overall, Bitcoin's 30-day volatility is at a low not seen since early January.

According to CCData, Bitcoin's volatility has dropped to 48.2% this year from 62.8% last year and 79% in 2021. The cryptocurrency's average daily change has remained stable, with an average gain of 1.68% and an average loss of 1.93%.

Strahinja Savic, head of data and analytics at FRNT Financial, said traders are waiting for more clarity on debt ceiling negotiations or the Federal Reserve's interest rate policy. This is a wait-and-see moment.

US politicians are arguing over how to resolve the debt impasse as the process drags on, while minutes from the Fed's most recent meeting showed policymakers were uncertain about how much further tightening policy would be needed to continue slowing inflation.

According to expert Noelle Acheson, despite the huge upside potential of Bitcoin, there are currently not enough compelling reasons for investors to put money in. On the other hand, there are also not many reasons for current holders to sell. The macro backdrop is making investors wait and see how things play out.

David Duong, head of institutional research at Coinbase, told Cointelegraph that the cryptocurrency’s price stability is partly driven by the strong pullback in the USD, which is constructive for Bitcoin and the broader cryptocurrency market in the next 6-12 months.

CoinDesk, meanwhile, believes that investors have become “bored” with macro volatility. With banking sector turmoil, the ongoing conflict between Russia and Ukraine, a 25 basis point interest rate hike in May, a looming global recession, and the US debt war, digital assets seem to have “lost interest” in all of it. These traditional stories can only have an impact on traditional investors.

However, CoinDesk expert Nathan Cox noted that Bitcoin's recent calm could lull market participants into a "false sense of security." "As the macroeconomic winds of change continue to blow and undervalued narratives begin to unfold, we could see a return to high volatility," he said.

Xiao Gu (according to Bloomberg , Cointelegraph , CoinDesk )

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