Bitcoin Shows Very High Volatility
The first cryptocurrency’s price increased rapidly on the morning of February 25. Here are some figures and experts’ opinions about the situation.
Bitcoin is back to growth. Within a few hours, BTC quotes rose by almost $4.000, compensating for the fall experienced amid the military operation of Russian troops in Ukraine. As of 14:00 (GMT+2), according to CoinMarketCap, Bitcoin is trading at around $38.800, with a daily price increase of more than 10%.
The sudden rise led to the massive liquidation of short positions. Coinglass reported that the daily liquidations currently exceeded $388 million, while the crypto market total capitalization has already grown by more than 9% in the last 24 hours.
We asked experts about possible reasons for the sharp rise in BTC value. CoinsPaid trader Vince Pellizzari believes that we are witnessing the typical behavior of long-term investors who “redeem fear.” In his commentary, Pellizzari recalled a quote from famed investor Mark Mobius:
“The best time to buy is when there is blood on the streets.”
High volatility with any shocks and market uncertainty is typical for all risky assets, including Bitcoin, as Stanislav Akulinkin, EMCD Chief Financial Officer, stated. At the same time, cryptocurrencies today are a special asset class. Confidence in them is on the rise, as well as their share in the financial market. Therefore, investors use every opportunity to buy them cheaply, which happened after the fall, pushing the rate up, the expert said.
“Bitcoin has recently shown correlation with commodity prices and serves as a protection for investors from inflation. Thus, rising prices of oil, gas, wheat and other commodities also support cryptocurrencies. Fundamentally, military actions and the potential for new sanctions, such as disconnection from SWIFT, make alternative mechanisms for cross-border transfers increasingly attractive, which also contributes to the demand for crypto. It is also worth considering the rapid development of legislative regulation of the crypto market in many jurisdictions. Hence, there is a probability that the market will recover its positions rather quickly and will show impressive dynamics in the near future,” states Stanislav Akulinkin.
Dmitry Noskov, an expert of the StormGain crypto exchange, also believes that geopolitical tensions lead investors to run away from risky assets, including cryptocurrencies.
“Bitcoin is now worth more than $38.000, while the day before its rate fell below $35.000. The crypto market collapse followed a slump in global stock markets, which reacted to Russia’s military operation in Ukraine.
On Friday, meanwhile, there was a correction growth of digital assets. In addition to the technical correction, an important growth factor was the possibility that the US Federal Reserve may reconsider its further policy on the rate and refuse to raise it at its next meeting against the background of geopolitical uncertainty. The issue of a rate rise has been of great concern to investors in global financial markets recently. Now there is hope that the Fed will not tighten its monetary policy for now — at least until the situation in Ukraine is resolved.
Given this situation, Bitcoin may overcome the psychological benchmark of $40.000 and start moving towards $45.000,” such prospects are opening up for the first cryptocurrency, according to Dmitry Noskov.
Ilya Maskin, a representative of CCDesk, is confident that the fall of quotations on February 24 cannot be called a collapse. In his opinion, the collapse was clearly visible on the Russian stock market, but in the case of BTC, there was a pullback with further recovery. Bitcoin has a high chance of becoming a security asset in the expert’s opinion. His view coincides with the opinion of Dan Morehead, CEO of the investment company Pantera Capital. As further arguments, Ilya cites Mexico’s move towards accepting BTC as legal tender, as revealed in an interview with Mexican Senator Indira Kempis in Diario El Salvador.
“The same winds, contrary to the wishes of the Central Bank representatives, have begun to blow in Russia. On February 24, Alexander Shokhin urged the Russian government to legalize crypto transactions. In our opinion, the factors outlined will allow Bitcoin to recover and reach new peaks. We still do not see any reason for a crypto winter to start,” sums up Ilya Maskin.