Bitcoin has been experiencing low volatility recently, which could fuel greater adoption by enabling the cryptocurrency’s use as a medium of exchange.
As for whether this will actually materialize, analysts have offered mixed views.
Nigel Green, founder and CEO of independent financial consultancy deVere Group, forecasted that bitcoin’s modest price fluctuations will probably prompt greater use of the digital currency.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
While the digital currency’s price fluctuations have been “relatively modest” as of late, “volatility will return again,” he predicted.
“However, there is a growing sense that crypto sector will have less extreme swings moving forward,” emphasized Green.
“This is likely to further drive mass adoption.”
There is already evidence that this more widespread use is taking place, claimed Mati Greenspan, an analyst who works for social trading platform eToro.
“We are seeing a greater level of adoption in real-world use cases lately, which is very likely being supported by reduced price volatility,” he stated.
While the aforementioned analysts seemed optimistic that low price volatility would probably facilitate greater use of bitcoin, others seemed skeptical.
“While I’d like to agree, I’m afraid we haven’t been in this narrow range long enough,” warned Tim Enneking, managing director of Digital Capital Management.
“Remember when BTC was ‘stuck’ just about $6k and what happened then? I suspect that scenario is more likely to repeat than a long-term bottom,” he predicted.
He was not alone in stressing that the cryptocurrency markets can change at a moment’s notice, as Charles Hayter, cofounder and CEO of digital currency data platform CryptoCompare, also spoke to this subject.
Periods of low volatility can quickly shift to times of high volatility, noted Hayter.
Bitcoin’s ‘Sideways Market’
Marius Rupsys, a digital currency investor, also weighed in on the cryptocurrency’s current conditions.
“Bitcoin is in sideways market, therefore volatility is rather low,” he emphasized.
“Once we enter bull run or continue bear market, volatility shall increase to levels that are more common for crypto assets,” said Rupsys.
He also threw cold water on the proposed link between price volatility and the digital currency’s use as a medium of exchange.
“Bitcoin is considered more as a store of value (still speculative) rather than medium of exchange, at this point of time,” he asserted.
“Therefore, reduced volatility does not have much of impact to adoption.”
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Disclosure: I own some bitcoin, bitcoin cash and ether.