- Bitwise CIO Matt Hougan thinks the price fluctuations in Bitcoin (BTC) are narrowing down.
- CNBC says it could eventually lead to stabilization in the digital asset.
Is Bitcoin Becoming Less Volatile?
The apprehensions of investors toward Bitcoin usually lie in its energy use and volatility. The former is already aging poorly because of how Bitcoin mining companies are now shifting toward renewable energy sources to enable more sustainable operations amid the rising cost of electricity and regulatory pressure. That only leaves the latter, which is actually hard to defend because of the digital asset’s evidently short-term fluctuations right now.
However, former Inside ETFs Chief Executive Officer (CEO) and current Bitwise Asset Management Chief Investment Officer (CIO) Matt Hougan believes that the narrowing price swings of Bitcoin over the past decade may also render the other argument obsolete at some point. For him, BTC is now synchronizing itself with the elementary demand-supply dynamics in the market.
“What’s driving the bitcoin market right now is a simple demand-supply imbalance,” Hougan explained in an interview with CNBC’s ETF Edge. “We have this huge new source of demand from these ETFs, and we have supply that’s inelastic.”
Hougan admitted that Bitcoin may not be everyone’s cup of tea though.
“It moves around a lot,” said the Bitwise exec. “Some people find it difficult to understand.”
Bitcoin Now
After a series of new all-time highs (ATH) in consecutive weeks, Bitcoin prices appeared to be entering into a consolidation phase over the weekend. As of this writing at 5:00 AM UTC on Sunday, BTC is trading at the $66,300 line after exhausting its rally to a new historic high of $73,750.07 three days ago.
The current price shows a dip of around 3.77% on the 24-hour chart and 4.66% on the seven-day frame. Nonetheless, zooming out the graphs shows that it’s still up by 27.80% over a month with an astounding 157.41% gain within the year.
Trading volume also slumped by 24% as $48.67 worth of BTC moved between wallets and exchanges within the same period. Additionally, the dive to $1.30 trillion in the market cap of Bitcoin’s 19.56 million supply dragged it down to the ninth spot in the world’s top asset by overall valuation next to silver’s $1.43 trillion.
Will It Recover?
The long play for BTC lies in the ever-growing demand for its institutional adoption, particularly triggered by spot Bitcoin exchange-traded funds in the US as well as the buying sprees of companies and governments. Demand for it will be further amplified when the halving strikes approximately 33 days from now, which will drive down mining rewards from the presently estimated 900 daily BTC production to around 450 BTC a day.
On the other hand, MicroStrategy’s much-publicized BTC purchases have always been catalysts for short-term upward movements in Bitcoin’s price. As the company and its executive chair, Michael Saylor, just announced the sale of its $500 million worth of senior notes to grow its 205,000 BTC supply, this is something worth putting in our radars this week.