Over the past month, the bitcoin world witnessed something new as volatility, an issue that has marred the reputation of the bitcoin world since its inception, improved quite a lot. Sudden price jumps and falls in the price of bitcoin are not alien to the followers of cryptocurrencies. But last month, bitcoin showed a behavior that nobody was expecting. It became largely stable. It lingered around the price range of $6,400 and $6,500 for almost ten days straight, shaking the entire financial market up. The graph for the past month for bitcoin clearly shows the steady level that it maintained from October 19 onwards.
Right now, bitcoin is lingering around in the range of $6,300 and it has been maintaining this level since the beginning of November. So what does this improved volatility mean for bitcoin? Well, for starters, public trust.
Volatility has marred the dignity of the crypto market since day 1 and it is one of the reasons why the trust among the general public regarding cryptocurrencies is so low. Investors hold back from entering this market as one day it is seen shooting up, and the very next day, it is seen plummeting down. Volatility has been one of the major issues associated with bitcoin since its inception.
Now as volatility improves, it signifies that the market is moving towards more and more maturity. Improved volatility will help establish a good aura around bitcoin thereby improving its adoption in the public. The more the people adopt it, the more value it will gain. Up until now, bitcoin has been largely used by people as a source of gaining profit in fiat. With better volatility, new doors for using bitcoin as actual currency are likely to be opened up. One of the most important impacts improved volatility will have on the asset is the clearance of the path towards the approval of a bitcoin ETF.
The demands for a bitcoin exchange-traded fund (ETF) have been floating around for quite some time but as of yet, the regulatory body in charge, the United States Securities and Exchange Commission (SEC), has not been very kind regarding its approval. According to SEC, there are a lot of issues associated with this nascent world that need to be fixed first before we move on towards the establishment of a bitcoin ETF. These issues are related to the volatility, liquidity, valuation, custody, possible manipulation and other such risks that are present in the crypto ecosystem as of now. Previously, the founder of Morgan Creek Digital, Jason A. Williams, also pointed out that improved volatility has a lot to with an ETF. Talking about improved 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.
So, with less volatility, chances of the approval of a bitcoin ETF go up.
As bitcoin gains more and more trust among the public with issues like volatility handled, the road to a bitcoin ETF will be cleared more easily. If an ETF gets established it will most likely be the dawn of the good days for the asset. The institutional investment that is sitting on the sidelines will be pouring into the crypto market taking it towards more maturity, resulting in increased growth.
In the past month, we have seen bitcoin show a behavior which is not usually associated with it very often, stability. This signifies that the nascent market of cryptos is most likely moving towards its good days now. As public adoption increases and more and more developments are made, we might see cryptocurrencies finally incorporating themselves into the mainstream global financial market.