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Bitcoin’s waning volatility marks maturity amid macroeconomic updates

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Investing.com — Bitcoin has historically been seen as a highly volatile asset, but its volatility is decreasing and is expected to continue to decline as the original cryptocurrency matures, according to a research report by Kaiko Research.

In the short term, however, Bitcoin underwent fluctuations last week amid macroeconomic updates in the US, with prices swinging from $66,000 on Wednesday morning to nearly $70,000 later that day. By the end of the week, the flagship coin settled back to just above $66,600, as per the Kaiko BTC Benchmark Reference Rate. Overall, Bitcoin dipped by just over 4% last week, with selling outpacing buying on nearly all exchanges.

“The net cumulative volume delta (CVD) for top BTC trading pairs reached $518mn between June 10- 14, with Binance and Bybit witnessing the most selling activity,” Kaiko analyst wrote.

Despite the rollercoaster ride driven by macro news, Bitcoin has already shown signs of maturation in 2024. Specifically, the research notes that Bitcoin’s 60-day historical volatility has remained below 50% since the beginning of 2023. This contrasts sharply with the massive fluctuations of 2022, when volatility exceeded 100%. 

Bitcoin’s volatility hit an all-time low of 40%, far lower than the peaks of over 106% seen in 2021 when it reached record highs. Even the launch of spot Bitcoin ETFs in the US was relatively muted on the volatility front. While it’s too early to declare this the new norm, changes to Bitcoin’s market structure over the past year may help explain the relatively ‘boring’ price action.

“The US market close now commands a higher share of trading volumes, as BTC liquidity becomes more concentrated around the East coast trading window,” the report noted. Therefore, Bitcoin ETF demand trends should not be ignored when analyzing price movements. 

The reversal of inflows in US Bitcoin ETFs last week likely contributed to some of the selling pressure, as did macroeconomic news. As with all emerging asset classes, cryptocurrency is more likely to experience higher volatility due to new capital flows.

Kaiko concluded that Blackrock has overtaken Grayscale’s Grayscale Bitcoin Trust (NYSE:GBTC) in terms of assets under management. The $10 trillion asset manager now holds the title of the world’s largest spot Bitcoin ETF, surpassing the crypto-native incumbent.

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