The volatility of the leading cryptocurrency is falling after institutional investors buy billions of dollars worth of Bitcoin (BTC).
High volatility and constant price changes are two factors that often attract investors to the cryptocurrency industry. But with the advent of institutional funds, Bitcoin is slowly becoming a less volatile and more stable asset, according to Bloomberg.
As is known, various experts have “warned” cryptocurrency traders about Bitcoin’s expiration date, which will lead to a decrease in volatility. With the massive institutional entries the market is facing, Bitcoin’s 260-day volatility has dropped to 66, its lowest level since May, when Bitcoin hit below $40,000.
With reduced volatility, the asset could gain more recognition among traditional traders and investors, making Bitcoin’s relationship with the stock market stronger. Previously, the short-term correction in the stock market was clearly reflected in Bitcoin and other cryptocurrencies. With Bitcoin’s volatility falling, we can see even more similarity in the movements of the two different markets.
The main source of institutional funds remains the ProShares Bitcoin ETF, which has previously attracted more than $1.47 billion into the cryptocurrency market, in addition to other providers such as Grayscale and 21Shares.
While the newly launched Bitcoin ETF may not be the most suitable product to enter the cryptocurrency market as it is based on Bitcoin futures rather than a real asset, US investors have no choice but to use derivatives-backed products.