What Happened: Annual Bitcoin volatility will drop below that of Amazon Inc. AMZN in a few years if past patterns prevail, according to analysts from Bloomberg.
In a Crypto Market Outlook report, analysts found that the Bitcoin volatility regression line is on track to dip below Amazon’s reading by 2022. The 260-day risk measure is currently at 60% for Bitcoin as compared to 40% for Amazon.
“Similar to the early days of the benchmark crypto, in the first few years that Amazon traded publicly, its volatility averaged over 100%,” said the analysts.
Why It Matters: Bitcoin’s supply and demand dynamics play an important role in the price discovery of the leading digital asset. It has a fixed mining schedule which sets it apart from most other assets and markets with uncertain supply and demand.
The Bloomberg analysts find this to be a unique factor in determining the cryptocurrency’s future price trajectory.
“Representing innovative technology made possible due to the internet, we see little to reverse Bitcoin's path toward a global digital store-of-value and its market cap to keep rising, likely surpassing Amazon,” noted the analysts.
Bitcoin is known to be a historically volatile asset class. However, as research from the report suggests its rising volatility is only likely to continue until it reaches a new price threshold with greater market depth – possibly around $100,000.
“Once the crypto settles in at a new threshold…volatility should drop, we believe”, said the analysts, adding, “The way we see it, something unexpected has to trip up this technical indicator.”
Price Action: The market-leading cryptocurrency was trading at $48,494 at press time, down by 2.38% in the past 24-hours.
Image: Ishant Mishra via Unsplash
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