Bitcoin surpasses Ethereum in volatility
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As Bitcoin's halving event nears, investors are growing more anxious. This time, their nerves are heightened by Bitcoin setting a new all-time high price prior to the halving, something that hasn't been seen in previous four-year cycles. As a result, Bitcoin's 30-day realised volatility hit 60%, significantly surpassing Ethereum.
The price reaching $70,000 pushed several long-term hodlers (LTH) to lock in their profit. At its height, the realised profit exceeded $2 billion per day. A third of that came from Grayscale investors (the outflow from this fund continues due to its high management fees).
While LTHs were locking in profit, short-term holders (whose coins don't move for less than 155 days) accumulated BTC. This applies, first and foremost, to the newly created ETFs in the United States (the Grayscale fund was converted from a trust fund).
This circumstance supported the price at around $70,000, which allowed LTHs to offload their reserves.
What makes this inflow of funds into ETFs unique is the predominance of retail investors, something that Matthew McDermott, Global Head of Digital Assets at Goldman Sachs, noted in March. This group of market participants is more susceptible to emotions and doesn't rely on long-term trends when planning as institutional investors do. As a result, volatility is on the rise, and the price is reacting more strongly to the inflow of funds into ETFs.
Two weeks ago, the net outflow amounted to $888 million, and Bitcoin fell by 3% to $65,000. Last week, it was replaced by an influx of $860 million, and Bitcoin rose by 7% to $70,000. Now, the ETFs are once again seeing an outflow, and BTC's price is dropping.
Since LTHs continue to be interested in taking profits, miners are likely to join them after the halving event as a result of the falling income, and the price will be more sensitive to outflows from the ETFs.
Bitcon's daily volatility is also rising, although sharp price drops could cause panic among ETF buyers due to a lack of experience with cryptocurrencies. This can lead to sharp price spikes in April.
StormGain Analytical Group
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