Are investors getting tired of Bitcoin?

Bitcoin has risen more than 60% since the beginning of the year, but its price rarely fluctuates by double digits, causing many investors to become "less interested" in the cryptocurrency.

In the summer of 2021, when the world's largest cryptocurrency dropped to $31,500, Dang Khoa (Ho Chi Minh City) invested over 20 million VND to "try it out". After a week, Bitcoin increased by nearly 13%, and Khoa sold it for a profit of over 2 million VND, which sparked his interest in this new asset class. He decided to dedicate time to learning trading techniques and thoroughly studying indicators such as RSI (to detect overbought or oversold conditions), SMA (to determine price trends), and Bollinger Bands (to measure market volatility)...

By the end of July 2021, the cryptocurrency had fallen below $30,000. This was also when Khoa re-entered the market with a more proactive approach and a capital of over 100 million VND. At that time, Bitcoin could fluctuate by more than 10% in a single day. Although not every trade was successful, he still had many sessions with profits of tens of millions of VND in just one day.

"I called it the 'get rich overnight' phase and was captivated by Bitcoin's high volatility," Khoa recalled.

This young investor then withdrew all his cryptocurrency to limit debt when buying an apartment in early September 2021. Staying out of the market throughout the cryptocurrency "winter," Khoa returned in 2023 but gradually became discouraged because, according to him, the former "charm" of Bitcoin (i.e., its high volatility) was gone.

He realized that this currency had "matured." Despite its upward trend, "getting rich overnight" was almost unheard of. Even the consecutive "waves" of price increases since the beginning of the year, which saw Bitcoin rise by over 60%, didn't excite Khoa and the investors he knew.

They are allocating capital to explore other cryptocurrencies. Khoa, in particular, has mainly traded Cosmos and Optimism since the beginning of the year. This investor recently cited an example with Optimism, where he made a profit of over 4-5 million VND overnight after investing 40 million VND on the evening of March 2nd, then quickly selling it the next morning when the price rose to nearly $4.3 per unit. Furthermore, anticipating the approval of similar ETFs for Ether, Khoa has also invested approximately 30% of his capital to hold the world's second-largest cryptocurrency for the long term.

Not only Dang Khoa, but many other investors are trending towards shifting their funds from Bitcoin to other asset classes . Analysis of capital flows in the derivatives market during the last 10 trading days of February by the FxEmpire data platform shows that money is flowing out of the world's largest cryptocurrency and into altcoins, with Ether being a prominent example.

"Investors are exiting the Bitcoin market to reinvest their profits in Ether," the platform noted.

A recent report by market analysis firm Glassnode, which examined various liquidity data, cash flow, and metrics, indicated that the recent uptrend has shifted capital flows toward altcoins. Their altcoin indicator shows better and more sustainable growth than before, primarily focusing on high-market-cap assets.

Bitcoin is known for its high and frequent volatility. For years, investors viewed this as a feature rather than a flaw, as it could yield significant and immediate profits. But recently, according to Business Insider , the volatility of cryptocurrencies has become much more like that of a conventional and "boring" asset.

According to data from market analysis platform DataTrek Research, Bitcoin's long-term volatility was once more than three times higher than that of the S&P 500 index, which typically fluctuates around 1% daily in either direction. Since September 2022, Bitcoin's volatility has been below average. Even the recent launch of spot ETFs has not led to a significant surge in its price.

The chart below shows the 100-day alternating standard deviation of Bitcoin returns from 2015 to the present. The alternating standard deviation indicates the degree of dispersion of market price relative to the average. A higher standard deviation indicates greater volatility in Bitcoin price, and vice versa.

Bitcoin has been fluctuating within a smaller range than the average since the end of 2022. Source: DataTrek Research — Bitcoin has been fluctuating within a smaller range than the average since the end of 2022. Source: *DataTrek Research*

It's worth noting that Bitcoin has historically peaked and troughed during periods of above-average volatility. For example, from December 2017 to March 2019, the asset reached a record high of $19,000 and then plummeted to $8,000. Several other events over the past few years have also shown similar patterns. Meanwhile, stocks tend to bottom out during periods of above-average volatility, but reach new highs during periods of low volatility.

Data from DataTrek Research shows that Bitcoin has been more stable than usual over the past 18 months, although it remains more than twice as volatile as large-cap US stocks. "The increased institutional interest may be reducing Bitcoin's daily price volatility. Simply put, this cryptocurrency may finally be maturing," the DataTrek Research team stated.

Bitcoin's stability is also evident in its recent record-breaking uptrend of $69,200. While its price has been soaring since the beginning of February, the daily price fluctuations have only been around $1,000-$2,000. In many sessions, the price chart has remained almost flat, with the difference between the highest and lowest prices of the day being only a few hundred dollars.

The period of greatest market volatility was from the evening of March 5th to the early morning of March 6th, when the price of Bitcoin dropped by more than 14% in just a few hours. On social media forums discussing cryptocurrencies, many investors complained that the currency rose slowly but fell too quickly.

Meanwhile, during the uptrend at the end of 2021, Bitcoin typically fluctuated between $3,000 and $4,000 a day throughout October and November 2021. In some sessions, the difference between the highest and lowest prices of the day reached nearly $6,000. After peaking at nearly $68,800, Bitcoin also experienced a price drop shortly afterward, but only lost 5.5%.

Mr. Ho Quoc Tuan, a senior lecturer at the University of Bristol (UK), believes that the volatility of Bitcoin over the past two weeks has led many to think that this cryptocurrency is skyrocketing. However, according to him, Bitcoin has actually become much more stable.

"It's becoming increasingly difficult for investors to get rich and expect the price to rise from $3,000 – the point at which some Bitcoin funds like Grayscale were launched – to $60,000 as before," Mr. Tuan said.

On the other hand, Bitcoin's new characteristics attract capital from investors who prefer stability. As a result, this makes the asset even less volatile, with price movements occurring sequentially.

"Sooner or later, hot money will shift to other channels, but no one knows for sure what those channels will be," this expert stated.

Little Gu

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