One of the consistent knocks against Bitcoin, and cryptocurrencies in general, has been their price volatility. On the one hand, volatility to the upside is great for investors who can reap the benefits of huge price rises. But volatility on the downside, and the potential for big losses, is still keeping many investors from investing in Bitcoin and other cryptocurrencies. Right now, however, Bitcoin volatility has reached three-month lows, with a number of different reasons for that.
One reason for Bitcoin’s relatively low volatility could be the fact that Bitcoin is becoming a safe haven asset, much like gold and silver. And while gold and silver will take off in price once the reality of the coming recession is apparent, right now their trading is pretty range-bound. Similarly, investors are treating Bitcoin as a safe haven, but there isn’t anything taking place to really shoot Bitcoin far out of its current trading range. Once more negative economic data comes in, and once more investors realize that the economy is in tatters and that the dollar is being massively devalued, then Bitcoin’s price should move up and out of its current trading range.
Another reason for low volatility is the fact that Bitcoin will halve on May 12. Halving means that the reward miners receive for processing the Bitcoin blockchain is cut in half. Whereas currently miners are receiving 12.5 BTC per block, after the halving they will receive 6.25 BTC. This is the first halving that has occurred since 2016, meaning that it’s the first halving since Bitcoin really hit the mainstream.
After previous halvings, Bitcoin’s price has jumped. And while many analysts are claiming that the upcoming halving is already priced into Bitcoin, that remains to be seen. What seems to be certain is that Bitcoin’s price is remaining relatively steady ahead of the halving as everyone waits to see what will happen. No one wants to see a return to huge swings in volatility, rather a return to steady long-term price growth. After the halving occurs, we just may see that happen once again.