Crypto Market Volatility Rises Again, What’s Up?

Crypto Market Volatility Rises Again, What's Up

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The price of Bitcoin (BTC) fell back below USD 47,000 or around IDR 674.3 million, although technically support around USD 43,000 could stabilize the pullback.

The crypto market has also seen a strong rise in short-term volatility over the past 24 hours, similar to what happened during Bitcoin’s break above USD 45,000 last week, according to data provided by Skew.

European Union votes in support of controversial measures

On Thursday, EU lawmakers voted in favor of controversial measures banning anonymous crypto transactions.

The proposal is intended to extend the anti-money laundering (AML) requirements applicable to conventional payments of more than EUR 1,000 to the crypto sector. BTC was down 2 percent within minutes of the voting.

Meanwhile, alternative cryptocurrencies (Altcoins) underperformed Friday, indicating a lower risk appetite among crypto traders.

For example, ethereum (ETH) fell as much as 4 percent over the last 24 hours and AAVE lost as much as 9 percent, compared to a 3 percent drop in BTC over the same period.

The current pullback across speculative assets can be limited. Historical data suggest further gains are possible in April and May, albeit with greater volatility due to ongoing macroeconomic and geopolitical risks.

Bitcoin has outperformed the S&P 500 so far this year, albeit with higher volatility.

However, according to data from IntoTheBlock, based on risk-adjusted returns Bitcoin is slightly below the S&P 500 over the past 30 days.

Generally, over time, crypto investors are compensated for the higher volatility in the form of higher returns than stocks.

For some investors, diversification has been a challenge over the past few months due to Bitcoin’s increasing correlation with stocks. However, gold and other commodities outperformed over the past three months.

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