Bitcoin (BTC-USD) and Ethereum (ETH-USD) traded in negative territory during Friday morning trading and appear to end the week in losses, while stocks are trending higher and have been on course for a week Win, in a rare relationship that makes speculators think.
Some investors have taken note of the falling volatility of Bitcoin (BTC-USD) and Ether (ETH-USD) over the past few weeks versus the volatile stock market as the price of the two largest cryptocurrencies by market cap continue to trade in range after range is seen drops at the beginning of the year.
Looking at intraday price action, Bitcoin (BTC-USD) slipped 1.6% at 10:34 ET to $19.01K compared to its November 2021 peak of $68.9K and Ether (ETH-USD) drifted lower 2% to $1.28K from its all-time high of $4.64K in November a year ago. All three major stock indices each rose less than 1%, with the Dow Jones (DJI) +0.7%S&P 500 (SP500) +0.5%and Nasdaq (COMP.IND) +0.2%.
Jim Bianco, the president of Bianco Research, pointed out that the old Wall Street adage “never short a Dell market” now applies to Bitcoin (BTC-USD) as the token’s 30-day realized volatility ( Vol) fell to its lowest in more than two years, he wrote in a series of Twitter posts. This is perhaps even more true for Ether (ETH-USD), whose realized volatility has fallen to its lowest level in over five years. These volume declines could be viewed as negative as it implies that speculative demand is slowing down.
“However, this is undoubtedly a good thing as it means more people are holding Bitcoin as an investment and fewer people are holding it as a speculative hot potato,” said Seeking Alpha contributor Logan Kane, who views BTC as a buy. “Should volatility drop further, it means investors can expect smoother performance and likely higher fair value as more people become more comfortable with the allocation.”
The stock market, however, is keeping market participants on their toes as the S&P 500 (SP500) realized amid the US Federal Reserve’s aggressive monetary tightening campaign and deepening recession that volume was changing hands with one of the highest risks in the last decade.
“Markets are down on apathy, not excitement. BTC and ETH have apathy. The S&P 500 is almost the opposite as prices move like a video game. This could also be another sign that the close relationship between TradFi and crypto is breaking down. If so, that’s long-term bullish for crypto,” Bianco claimed.
Note that the S&P (SP500) has continued to fall over the past month (-4.9%), albeit scarce, as Ether (ETH-USD) (-4.8%) and Bitcoin (BTC-USD) (-1.1%), as shown in the following graphic. This is a relatively unusual dynamic given that tokens, which are considered a measure of risk tolerance and overall sentiment, have historically seen easy swings of over 5% in a single session.
Fellow SA contributor The Digital Trend believes Bitcoin will break out of its month-long dormancy and return to its typically volatile state.