OCTOBER: THE CALM BEFORE THE STORM FOR BITCOIN?
Over the past two weeks, the price of Bitcoin has been largely unmoved and has seen the least volatility since 2016. This is in contrast to the overall stock market with the CBOE Volatility Index reaching the highest level in October since early this year. Bitcoin’s low volatility was mostly because of the lack of major regulatory updates or exchange hacks.
During October, investors were disappointed when BlackRock failed to talk cryptocurrencies in the third quarter earnings call. Perhaps, the biggest news during the month was the decision by Fidelity to start a new custodial services company targeted at institutional clients. This was significant because Fidelity is one of the largest brokerage companies in the world. Furthermore, its services would solve the biggest problem that large investors have with Bitcoin – how to store it.
There was also a meeting between the SEC, CBOE and VanEck that focused on the failed ETF attempt. Issues that prevented the SEC from approving the Bitcoin ETF are said to have been resolved which could result in a green light in the near future. Traders are watching the markets carefully, however, and awaiting updates. This is because last year, when the CME and CBOE launched the Bitcoin futures, it was seen as a key factor that would attract more participants – but recent data has shown that Bitcoin futures are traded thinly on these exchanges.
With a level of uncertainty in the air, the volatility in the price of Bitcoin could be the calm before the storm. This could mean that in November, the price could move sharply in either direction.