- In recent months, the bitcoin price has stubbornly hovered around $20,000, a sign that volatility in the market has settled down.
- Bitcoin's 20-day rolling volatility has fallen below that of the Nasdaq and S&P 500 indexes for the first time since 2020, according to data from crypto research firm Kaiko.
- "When Bitcoin is stuck in such a range of fluctuation, it gets boring, but that's also when retailers lose interest and smart money starts to accumulate," Vijay Ayyar of crypto exchange Luno told CNBC.
Bitcoin's lack of volatility lately is not a bad thing and could actually point to signs of a "bottoming out" in prices, analysts and investors told CNBC.
Digital currencies have fallen sharply since a stellar surge in 2021 that saw bitcoin climb as high as $68,990. In recent months, however, the bitcoin price has stubbornly hovered around the $20,000 mark, a sign that volatility in the market has calmed.
Last week, the cryptocurrency's 20-day rolling volatility fell below that of the Nasdaq and S&P 500 indices for the first time since 2020, according to data from crypto research firm Kaiko.
Both stocks and cryptocurrencies have fallen sharply this year as Federal Reserve rate hikes and a stronger dollar weigh on the sector.
The correlation between bitcoin and stocks has increased over time as more institutional investors have invested in cryptocurrencies.
However, the cost of bitcoin has recently stabilized. And for some investment firms, this decrease in volatility is a positive development.
Vijay Ayyar, head of international at cryptocurrency exchange Luno, told CNBC via email: "Bitcoin has mainly been range bound between 18-25K for 4 months now, which indicates integration and a potential hollowing out pattern, given we are seeing the Dollar index top as well.
We have seen BTC bottom when DXY has topped in the past, like in 2015, so this could be an instance of that pattern repeating itself.
A strong indicator that the market for digital assets has matured and is becoming less fragmented, according to Antoni Trenchev, co-founder of cryptocurrency lender Nexo, is bitcoin's price stability.
An wnd to crypto winter
Cryptocurrencies have suffered a brutal crash this year, losing $2 trillion in value since the rally peake in 2021. Bitcoin, the world's largest digital coin, has lost about 70% of its value since peaking in November.
The current so-called "crypto winter" is largely the result of aggressive tightening by the U.S. Federal Reserve, which is raising interest rates to stem rapidly rising inflation. Large crypto investors, such as highly leveraged Three Arrows Capital, were caught off guard by the pricing pressure, which accelerated the market's decline.
However, some investors believe that the ice is now starting to thaw.
According to Ayyar, indications point to the beginning of a "accumulation phase," during which institutional investors will be more open to betting on bitcoin given the current price slump.
While Bitcoin's narrow price range makes it monotonous, Ayyar added that this is also the time when retail investors lose interest and smart money begins to amass.
At a time when typically interest in traditional markets would be declining, Matteo Dante Perruccio, president of international at digital asset management company Wave Financial, has noticed a "counterintuitive increase in demand" from traditional institutional investors for cryptocurrencies.
Despite the decline in prices and waning interest from retail investors, financial institutions have continued their efforts in the cryptocurrency space.
Mastercard previously introduced a new blockchain security tool for card issuers before announcing a service that enables banks to provide crypto trading. FTX, a cryptocurrency exchange, and Visa have partnered to offer debit cards that are connected to users' trading accounts.
In the most recent cycle of cryptocurrency movements, Goldman Sachs hypothesized that we may be nearing the end of a "particularly bearish" phase. Bank analysts noted similarities with bitcoin trading in November 2018 when prices initially stabilized before gradually increasing in a note published on Thursday.