The former lead of the Ark Invest crypto branch has an opinion on what is happening with the cryptocurrency market and why it craves the volatility it got used to through years of trading operations.
Lack of volatility creates problems
The rangebound on the cryptocurrency market is the last thing investors would like to see, considering the lack of volatility of trading volume following it. Burniske said it is "no wonder" that cryptocurrency traders are starting to "go crazy" after living more than a month without any volatility spikes.
The demand for risk is not the only problem on the market. Volatility has always been one of the main drivers for the cryptocurrency industry, as retail traders provide more inflows to the market whenever they see a high return probability.
With high retail inflows to the market, institutional investors usually give more attention to digital assets, hence providing funding that launches long-term bullruns and increases the profitability of the industry as a whole.
Can low volatility be good for market?
Despite the necessity of volatility in the market, it may sometimes be a good thing for a certain layer of investor. Whenever the market is ranging, it is easier to accumulate assets by purchasing them at the lower border of the rangebound each time the asset reverses.
Some traders use scalping strategies by amplifying their profit with the help of leveraged trading. However, such a strategy is usually considered high risk and should not be executed without proper risk management and preparation. According to the CVI indicator, the average volatility on the crypto market decreased by almost 50% since June.