Institutional investors and hedge fund managers do not seem to be ready to capitalize on the profit opportunities that Bitcoin could provide. On Tuesday, Bitcoin failed to establish a support level above $33,000; it started off the week trading sideways, but it eventually fell below $32,000. The slightly bullish action seen on Sunday night has yet to return this week.
The price of Bitcoin now hangs around the $31,500 range as the market slowly regroups, waiting to see where the market might go from here.
At press time, the overall cryptocurrency market is trading at roughly 4.6% down over the last 24 hours and is in the red over the last three. The leading cryptocurrency’s price chart indicates a sharp drop after BTC reached its highest point since November, while the market capitalization chart shows the recent dip as a wave, which could carry it down to roughly $27,600 as a result. It should be noted that this estimate is based on technical analysis, which traders are strongly relying on because there have not been too many fundamental analysis developments to latch onto.
In the meantime, Bitcoin volatility, measured by the Bitcoin’s VIX, has decreased by about 20% over the last few weeks, which would be good news under normal circumstances. However, a decline in Bitcoin volatility is also correlated to a lower Bitcoin price. Thus, this data point suggests that BTC is still trending in a positive direction for the rest of the year.
The VIX, sometimes referred to as the market’s fear gauge, has been quite active this year as a large number of cryptocurrency investors have come into the market. The VIX was in the mid-to-high teens throughout the rest of the year, until it spiked to its highest point so far this year of 27.8 just after the Christmas holidays. However, it began to drop rapidly following this, and has been trending down ever since.
While some analysts explain that institutional investors do not like to enter the market when the VIX is too high, the truth is that hedge fund managers will swoop in whenever they see a buying opportunity, and this may not happen until BTC/USD drops below $30,000.