Expert Take: Why Bitcoin Volatility will Decline With Maturity as it keeps Attracting Stronger investors
January 29, 2021 9:44 AM
Bitcoin's strong price movement has attracted larger investors which could result in a less volatile market as the price of the assets moves higher according to experts.
In a recent interview with Bloomberg Eric Peters, the Founder of One River Asset Management explains why he thinks crypto's volatile nature will lessen sighting maturity as a major factor to help stabilize its price.
He told Bloomberg on Thursday
"There are all kinds of reflexive dynamics in these assets that ironically will lead to less volatility the higher they go,” he said. “As the prices are going higher, you are drawing in new types of investors with stronger hands.”
Eric's One River Asset Management has accumulated over $600 million worth of Bitcoin over time with their target set at owning roughly $1B worth of Bitcoin (BTC) and Ethereum (ETH) before the end of second quarter of 2021.
One thing which have kept the big firms at bay for a long time since bitcoins inception was its volatile nature but that intensity in price moves has declined over the years, Bitcoin’s daily volatility hasn’t exceeded 10% since 2013. Since 2016, daily volatility has eclipsed 7% only a few times, according to a Bitpremier data report.
Peters from Bitpremier believes that increased institutional buyers will play an increasingly vital role in helping Bitcoin mature avoiding massive price swings seen in previous times.
He told Bloomberg:
“Almost every big, creditable institution in the U.S. is having discussions about this.”
Goldman Sachs, a U.S. financial institution that was highly critical of Bitcoin in the past, has even conceded that the digital asset is starting to mature. However, long-term stability will depend on greater institutional adoption.
The bank's global head of commodities research Jeff Currie, told CNBC recently that Bitcoin still needs to attract smart money investors in a bid to help improve crypto market stability.
However, if recent market data are to go by it shows that despite the recent interest from institutional investors. that has not stopped bitcoin from going under $30k after hitting $41k a few weeks back.