Since last week, Bitcoin has been in a consolidation and sideways trading range for over 75 days, according to an analysis by Bitfinex. This narrow range reflects the cryptocurrency’s maturity as a financial asset, and also indicates that its volatility has dropped to historically low levels compared to previous years, when it was known for its violent movements that could lead to sharp rises or falls in very short periods.
Despite this noticeable decrease in volatility, Bitcoin is still classified as a risky asset, just like the stock market, rather than a store of value like gold, a title that many voices in the crypto community have sought to establish over the past years. This view of Bitcoin as a risky investment asset is reinforced by its decentralized nature and its heavy reliance on market sentiment and global liquidity movements, making it vulnerable to volatility resulting from major economic and political news.
The cryptocurrency continues to be influenced by macroeconomic factors, with monetary and fiscal policies playing a major role in determining its trends. Among these factors are the tariff decisions announced by former US President Donald Trump against China, Canada, and Mexico, a move that caused turmoil in global financial markets and indirectly impacted digital assets.
In addition, the broader economic environment, including interest rates set by central banks and developments in traditional markets, remain major factors influencing investor appetite for Bitcoin. As interest rates rise, investors tend to prefer assets with stable returns such as bonds, which reduces the appeal of Bitcoin and other digital assets that do not provide a fixed income.
On the other hand, some investors continue to view Bitcoin as a hedge against inflation and economic turmoil, especially in light of the expansionary monetary policies pursued by some countries. We have previously seen how economic and political crises push investors to seek safe havens, which could boost the value of Bitcoin in the future if inflation continues to rise or uncertainty in global financial markets increases.
Posted using Tribaldex Blog