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Bitcoin volatility: Research Suggests Bitcoin Volatility is Set to Increase in 2022

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One in five (22%) of Bitcoin traders who trade at least $1,000 a month in the cryptocurrency expect the level of volatility in the price of Bitcoin to increase dramatically in 2022, and further 57% say it will increase slightly. Only 18% expect it to fall or stay the same, according to a study (1) from GNY, the leading blockchain based machine learning business.

The two main reasons for an increase in price volatility identified by those traders interviewed was Bitcoin Whales – they hold large proportions of the total outstanding float of Bitcoin – are expected to increase their holdings and become more influential – this is the view of 49% of those surveyed. The same number said that increased developments around the tax treatment of Bitcoin and other cryptocurrencies in 2022 will lead to a rise in volatility.

Some 38% said they expect more security breaches and more being openly disclosed will increase volatility while 38% said volatility will also be fueled by more big companies buying Bitcoin and talking about their holdings.  Nearly one in three (29%) said they expect more regulatory news from around the world to increase price volatility in cryptocurrencies in 2022.

Cosmas Wong, CEO GNY said: “2021 saw some huge fluctuations in the price of Bitcoin and other cryptocurrencies, and our study suggests that 2022 will see a rise in levels of volatility. This presents a huge opportunity for traders to improve their returns, but they are also at greater risk of suffering losses. They need to make more use of trading tools that for example help predict future price movements.”

GNY recently launched BTC Range Report, providing some of the most accurate forecasts around Bitcoin volatility of any platform or service available today. Extensive testing of BTC Range Report has delivered a mean absolute percentage error (MAPE) of between 3% and 7% making it one of the most powerful BTC prediction tools in the market. The average of the majority of competitor BTC prediction tools tested by GNY was 10%, but it was as high as 17% for some platforms.

The BTC Range Report uses proprietary machine learning to forecast Bitcoin volatility. The tool is the first consumer facing product offered by GNY and uses specialized neural nets and a custom RSI to generate optimized forecasting for the projected daily range for Bitcoin.

The BTC Range Report is issued every Tuesday and spans a seven-day period. For the price of just $10, it can be purchased with ETH or GNY tokens, and access is provided directly through the user’s Metamask wallet and is available to purchase on the GNY.io website. Version 1 of the GNY BTC Range Report offers:

  • GNY’s daily projected volatility range for BTC as a graph and a table
  • a forecast of which day will hold the weekly high and the weekly low
  • forecast of daily volumes
  • historical daily high and low prediction graph for the last two weeks VS BTC Actuals
  • mean absolute percentage error (MAPE) for GNY historical daily high and low predictions VS BTC Actuals for the previous two weeks

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Bitcoin

Bitcoin Eyes Gains with Seasonal July Boost After Slump

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After several months of declines and rangebound trading, Bitcoin (BTC) bulls have reason to cheer as the largest cryptocurrency is poised for a potential seasonal upswing this July.

Historical data and recent market movements suggest a positive outlook for Bitcoin, following a period marked by billions in sales, upcoming selling pressure, and outflows from exchange-traded funds (ETFs).

Since April, Bitcoin has been trading within a narrow band of $59,000 to $74,000, weighed down by market dynamics and peak negative sentiment among retail traders.

However, July has historically been a bullish month for Bitcoin, and early indicators show a possible reversal of recent trends.

On the first day of July, U.S.-listed ETFs recorded nearly $130 million in inflows, their highest since early June.

This influx comes after a significant $900 million outflow in the previous month, signaling renewed investor confidence in the cryptocurrency.

“Bitcoin has a median return of 9.6% in July and tends to bounce back strongly, especially after a negative June,” said Singapore-based QCP Capital in a recent Telegram broadcast.

“Our options desk saw flows positioning for an upside move last Friday into the month-end, possibly in anticipation of the ETH spot ETF launch. Many signs point to a bullish July.”

Historical data supports this optimistic outlook. Over the past decade, Bitcoin has gained an average of more than 11% in July, with positive returns in seven out of the ten months.

A 2023 report by crypto fund Matrixport highlighted significant July returns in recent years, with gains of around 27% in 2019, 20% in 2020, and 24% in 2021.

Seasonality, the tendency of assets to experience regular and predictable changes that recur annually, appears to be a driving factor.

These seasonal cycles can be influenced by various factors, such as profit-taking around tax season in April and May, leading to drawdowns, and the generally bullish “Santa Claus” rally in December, which reflects increased demand.

As the cryptocurrency market enters July, Bitcoin traders and investors are optimistic about a potential rally. While the market remains cautious of underlying pressures, the historical trends and recent inflows suggest a favorable environment for Bitcoin’s resurgence.

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Bitcoin Slumps 13% in Q2, Prompting Investor Concerns

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As the second quarter of 2024 concludes, cryptocurrency investors are left contemplating the future of Bitcoin after the leading digital currency retreated significantly from its all-time highs.

Bitcoin, which had previously soared to a record $73,798 in mid-March, has seen a sharp decline, closing the quarter at approximately $61,000.

This represents a 13% drop since March, a stark contrast to the substantial gains of 67% and 57% in the previous two quarters, respectively.

The downturn has spurred concerns among investors about the broader implications for risk appetite in financial markets, particularly as the prospect of higher-for-longer interest rates looms.

This sentiment was echoed by Austin Reid, Global Head of Revenue and Business at FalconX, who noted, “A lot of people in the market have questions that are mostly anchored on concerns from a macro perspective. I think there’s just some short-term uncertainty being reflected within the crypto market, as we’re seeing in some other asset classes too.”

One of the clearest indicators of waning interest in Bitcoin is the significant slowdown in demand for U.S. exchange-traded funds (ETFs) that hold the cryptocurrency. These funds, approved by the Securities and Exchange Commission in January, saw a flood of interest initially.

However, the second quarter saw inflows of just $2.6 billion into Bitcoin funds, a sharp decline from the $13 billion recorded in the first quarter, according to data from CoinShares.

“There was a lot of euphoria around the release of the ETFs, and then there was a natural price correction after the rally,” said Matthew O’Neill, Co-Director of Research at Financial Technology Partners.

He explained that the ETFs initially attracted professional investors who wanted Bitcoin exposure but preferred to do so through institutional means.

The reduced inflows into Bitcoin ETFs may reflect a broader hesitation among investors to re-enter the market amid current uncertainties. For those who haven’t yet bought into the ETFs, O’Neill suggests they might be waiting for the next upward price move before committing.

Despite the current downturn, the longer-term outlook for Bitcoin remains a topic of debate. While some analysts see the recent price correction as a temporary setback in an overall bullish trend, others warn that the cryptocurrency market could face more significant challenges ahead, particularly if macroeconomic conditions remain unstable.

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Bitcoin Slumps to One-Month Low as Crypto Market Loses Steam

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The cryptocurrency market is facing a turbulent period, marked by significant declines and waning investor confidence.

Bitcoin, the leading digital asset, has dropped to a one-month low, trading at approximately $62,275 as of Monday morning in London.

This decline is part of a broader downturn in the crypto market, which has seen its second-worst weekly performance of 2024.

The overall gauge of the largest 100 digital assets fell by about 5% over the past week, according to data compiled by Bloomberg.

This represents the worst decline since April and highlights the growing concerns among investors regarding the future of digital currencies.

A key factor contributing to this downturn is the cooling demand for Bitcoin exchange-traded funds (ETFs).

Over the past six days, U.S. Bitcoin ETFs have experienced a consistent outflow of funds, undermining the confidence of investors who were hoping for a steady influx of capital into these investment vehicles.

This has compounded the already existing uncertainties surrounding the cryptocurrency market.

Adding to the market’s woes is the prevailing uncertainty over the Federal Reserve’s monetary policy.

Speculation about the Fed’s ability to cut interest rates from their current two-decade high has created a cloud of doubt over the entire financial market, including cryptocurrencies.

Analysts suggest that this uncertainty is dampening broader risk appetite, with investors becoming increasingly cautious about their investments in volatile assets like Bitcoin.

David Lawant, the head of research at FalconX, noted that the current crypto market dynamic is “characterized by low volatility, soft volumes, and order books getting unbalanced when prices start to move to the edges of their range.”

This imbalance has made the market more susceptible to sharp declines, as seen in the recent slump.

The declines in other major cryptocurrencies are also noteworthy. Ether and Solana have experienced their longest streaks of weekly declines since last year and 2022, respectively.

This comes despite preparations by fund companies to launch the first U.S. ETFs that invest directly in Ether, the second-ranked crypto asset. Solana, once a favorite among digital-asset hedge funds, has also seen significant drops.

Bitcoin, which hit a record high of $73,798 in March, is now trailing behind traditional assets such as stocks, bonds, and gold this quarter.

Analysts are now focusing on the 200-day moving average, currently at around $57,500, as a potential zone of support for Bitcoin’s price.

Tony Sycamore, a market analyst at IG Australia Pty, suggests that this level could provide some stability in the coming weeks.

As the cryptocurrency market navigates through these challenges, investors and analysts alike are keeping a close watch on any developments that could influence the market’s direction.

For now, the sentiment remains cautious, with many waiting to see if the recent declines will continue or if a recovery is on the horizon.

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