Is Bitcoin’s lack of volatility a blessing or a curse for investors?

<p><strong>By George Prior</strong></p>
<p>Bitcoin, previously known for its ‘wild price swings’, is now trading sideways which is both a blessing and a curse for investors, affirms the CEO of one of the world’s largest independent financial advisory, asset management and fintech organizations.</p>
<p>The analysis from deVere Group’s Nigel Green comes as volatility for major cryptocurrencies including Bitcoin and Ether are at multi-year lows – and have been for several months now.</p>
<p>He comments: “The price of Bitcoin, the world’s largest cryptocurrency by market cap, is still hovering around $29,400 which is a major combat zone between bulls and bears.</p>
<p>“Until recently, crypto was typically characterised for its wild price swings.  But in recent months it’s been trading pretty flat, which is both a blessing and a curse for investors.”</p>
<p>The deVere CEO explains that as the cryptocurrency market matures, a decrease in extreme price fluctuations lends a sense of stability that is “crucial for its integration” into traditional financial systems.</p>
<p>“This newfound stability attracts institutional investors, who have been historically wary of entering the market due to its extreme price swings.”</p>
<p>He continues: “This stability is also a boon for businesses and consumers looking for a reliable store of value or medium of exchange.</p>
<p>“As Bitcoin’s price becomes more predictable, it becomes a more viable option for everyday transactions. Businesses can confidently accept Bitcoin as a payment method without the fear of losing significant value between the time of purchase and conversion to fiat currency.”</p>
<p>While stability is beneficial for mainstream adoption, the reduction in volatility has raised concerns among investors seeking quick, higher risk, higher reward opportunities.</p>
<p>Bitcoin’s earlier reputation as a highly volatile asset attracted traders who thrived on rapid price swings. With the decrease in volatility, such opportunities for substantial short-term gains have become less common.</p>
<p>“For investors who thrive on volatility, the calmer waters of the Bitcoin market can feel limiting. They must adapt their strategies to the new normal, focusing on longer-term trends and holding positions for extended periods. This shift can be challenging for those accustomed to quick turnarounds and constant market action,” says Nigel Green.</p>
<p>To harness the benefits of Bitcoin’s stability while mitigating the drawbacks, investors are advised to adopt a diversified approach.</p>
<p>While Bitcoin’s reduced volatility might limit short-term gains, it also reduces the risk of significant losses. By allocating a portion of their portfolios to Bitcoin, investors can potentially benefit from its long-term growth prospects while managing overall risk.</p>
<p>Earlier this month, the deVere CEO included Bitcoin as one of three areas in which he is continuing to put his money this summer.  He said: “Not only does Bitcoin remain one of the best performing asset classes of the decade, I believe its performance will further strengthen. Both institutional and retail investors are increasingly seeing the value of a digital, global, borderless and tamper-proof currency and store of value.</p>
<p>“This trend will increase as adoption picks up further and as confidence grows again in the global economy.”</p>
<p>One potential catalyst that will increase volatility into the market is if, as Nigel Green now believes is likely, the US financial regulator approves spot Bitcoin Exchange-Traded Funds (ETFs).</p>
<p>This prediction comes amid media reports that the US Securities and Exchange Commission (SEC) could imminently give the green light to a swathe of applications from various major asset managers.</p>
<p>Spot ETFs invest directly in underlying assets, typically stocks or bonds, at the current market price (spot price). They aim to replicate the performance of a specific index or asset class by holding a portfolio of the actual securities that make up the index.</p>
<p>He says: “Should the SEC approve these filings, I expect the Bitcoin price will skyrocket.”</p>
<p>The deVere CEO concludes: “While the lack of short-term volatility can be frustrating for some investors accustomed to making quick returns, in the longer-term it will help drive sustainable price growth.”</p>
<p><strong>About:</strong></p>
<p><em>deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients.  It has a network of offices across the world, over 80,000 clients and $12bn under advisement.</em></p>