Financial Analysts Suspect Increased Bitcoin Volatility

Financial Analysts Suspect Increased Bitcoin Volatility

With the spike in Bitcoin prices trading above $20000 on 5th July, the crypto market witnessed a gain of 1.4% in the past 24 hours. With this, financial analysts suspect incoming volatility.

Spike in Bitcoin prices

The crypto market witnessed a gain of $50 billion since 4th July, with Bitcoin's price struggling to surpass the $20 billion mark. Though the price is slightly below this point, the spike has given the crypto market a high of 1.4%. However, analysts suspect new volatility that might surface with new traders walking in.

The conjunction of open price with funding rates serves as a good indicator to determine the direction of prices. However, in Bitcoin's case, the funding rates appear to be neutral, not leaving much optimistic hope. Such neutrality indicates that the long and short traders are almost on the same plane, and with added leverage to both, the chances of volatility are higher.

The past 24 hours have also seen $180 million worth of liquidated positions, with 75% belonging to the short traders. Such a stat indicates the bullish nature of Bitcoin prices in the market, which can further face a sudden bearish market and drop below the recovery level. 

Impact on investment decisions

 The estimated high volatility in Bitcoin prices has also affected investment decisions amongst many, mainly the experienced. Thus, bitcoin price volatility has not only delayed investment decisions but also pushed investors towards other investment opportunities.

The sole reason for such a shift is evident from the bitcoin market trend, where investors have gone all-in with their investment decisions owing to the recent price surge. However, dynamic as it is, this surge has caused considerable suspicion amongst financial experts and even experienced investors.

Such a volatile nature of bitcoin prices is not new. The dynamic rise and fall of bitcoin prices were witnessed between 2020 and 2021 when the prices initially rose to a next-level high. The bullish market soon faced a bear market, reducing the prices to as low as 90% of the previous value, shattering investor hopes. Hence, a word of caution: Maintain an investment strategy instead of being driven by bullish market trends.

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