Volatility is associated with the world of cryptocurrencies since its inception. It is one of the reasons why the adoption of cryptos is not large scale in the general public as of yet.
But in the recent times, the volatility associated with bitcoin has dropped quite significantly. Anthony Pompliano stated in a tweet that over the past month, bitcoin has remained less volatile than even NASDAQ, DOW and S&P 500.
But what does this signify for the asset? What kind of environment will be built regarding this asset in the mainstream financial market as a result of this? In order to get an expert opinion regarding this matter, BlockPublisher got in touch with Jason A. Williams, the founder of Morgal Creek Digital.
Answering to the question of less volatility helping the asset, Jason stated:
All has to do with the ETF. Think about the issues with getting it passed. Stability, price, transparency, liquidity, custody.
Upon inquiry by BlockPublisher regarding the improved volatility helping to get an ETF established, Jason said:
Yes, I think the whole stability came from retail getting rekt and institutional investors sitting on the sidelines. Volume way down.
Jason agreed that the environment that is being built as a result of bitcoin showing less volatility will eventually help to get a crypto-linked exchange-traded fund (ETF) approved.
Jason also explained one of the possible reasons why the volatility has improved. This likely happened due to the retail market getting destroyed and institutional money staying on the sidelines. As a result of these happenings, the market capitalization of bitcoin has also dropped significantly.
Up until now, the regulatory body in charge, the United States Securities and Exchange Commission (SEC), has not been very lenient regarding the approval of a bitcoin ETF. As pointed out by the SEC, the major issues that are linked with the world of cryptos are volatility, arbitrage, liquidity, custody, manipulation, and other such risks. Unless these are resolved, an approval is unlikely.
With improved volatility, general trust among the public and the investor community regarding bitcoin and other cryptos is likely to increase. The increased trust will increase the demand for the ETF and create more pressure on the SEC to grant an ETF approval.
But if all things go in the right direction, the establishment of an ETF will the asset in the long-term in terms of stability, price, transparency, liquidity, and custody, as implied by Jason. The market situation is expected to get better for bitcoin if this development is made, and it also seems that we might see it happen very soon.