February has been great for Bitcoin (BTC) — there’s no denying it. Even the most cautious, poker-faced of investors would have found it hard to contain their excitement as BTC stormed past the $50,000 milestone.
So optimistic was the sentiment that prices barely even flinched at the January CPI report — a 2% drop is nothing in crypto terms. Comparisons to the 2021 bull run were naturally drawn, fueling a fresh set of “Bitcoin at $100,000” predictions.
This excitement, however, should be tempered. On close examination, the current rally appears to be largely psychologically driven. The bigger picture indicates we’re in for a lot more of the boring price action that preceded it, and that 2024 will be altogether different from the euphoria of 2021.
Related: How much longer can indebted Americans keep buying crypto?
Markets have an affinity for round numbers, and this holds all the more true for crypto, where everything is exaggerated. On Feb. 9 we saw not one, but two such figures announced.
Firstly, Bitcoin spot ETFs the much-publicized gateway to cryptocurrencies for TradFi institutional investors — hit $10 billion in assets under management in less than a month of trading. Then, secondly, the S&P 500 read “big tech and finance” reached a historic milestone at 5,000 index points. What lies beneath and before these price moves tells another story.
Crypto Fear & Greed Index as of Feb. 18, 2024.
Bitcoin was trading within a relatively tight range of 1-2% in the days before the current spike. A macro take might be that the market remained cautious due to the Securities and Exchange Commission’s indecisiveness on matters like BTC spot ETF options, whether Ethereum (ETH) is a security or a commodity (and, in turn, approval of ETH ETFs), and the Fed’s reluctance to lower interest rates.
Though macro and not inaccurate, this is a myopic take. A look at the realized volatility of Bitcoin over the years strongly suggests that narrow ranges and caution aren’t merely a reflection of the current environment, but a sign of steady progression towards stability that contrasts sharply with the wild…
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