Bitcoins market has been performing exceptionally lately, with the cryptocurrency recording YTD returns of 160%, at press time. It should be noted, however, that even though the gains in the present market are more real, compared to 2017, the inclination from institutions in the market has mainly been driven by the high volatility in the digital asset market.
According to data provider Skew, despite the high volatility, the close to close Realized Volatility of Bitcoin is half of what it was in 2017. In fact, it has moved less than 2% close to close in absolute value 207 days this year, making it less volatile than most technology stocks or commodities in the traditional market.
However, since Bitcoin has not yet surpassed its previous ATH, the cryptocurrency, in a way, is still in unchartered territory. Ergo, there could be a regime change if Bitcoin moves above $20K, especially in light of the record cheapness of Options skew.
Bitcoin and digital gold
The said volatility and price have definitely invited more institutions to invest in Bitcoin, but will this interest sustain itself above the $20K price level? This depends on how much of the Bitcoin is digital gold narrative follows through.
Consider this – Recent entrant and prominent investor Stanley Druckenmiller noted that Bitcoin could be an asset class that has a lot of attraction as a store of value. This view definitely points to a shift in the thought process of big-time investors. In fact, while he conceded that he owned more Gold than Bitcoin, he added,
I own many, many more times gold than I own bitcoin, but frankly if the gold bet works, the bitcoin bet will probably work better because its thinner and more illiquid and ha ...
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