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Trading within 10% of a key trendline, 50-day moving average, data compiled by Bloomberg suggests that Bitcoin has been locked in its narrowest trading range since October 2020.
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But Bitcoin enjoys more than a single investment narrative, and some investors have been doubling down on the cryptocurrency on bets that an inflationary environment will see the nascent asset class come into its own as a hedge against higher prices and lower growth.
For all the criticism of volatility that has been leveled against Bitcoin, the benchmark cryptocurrency has demonstrated very little of that over the past week.
Even as global stocks were whipsawed by the Russian invasion of Ukraine and the soaring prices of commodities, Bitcoin has instead remained relatively calm given the circumstances.
Trading within 10% of a key trendline, 50-day moving average, data compiled by Bloomberg suggests that Bitcoin has been locked in its narrowest trading range since October 2020.
A study of blockchain flows however reveals that Bitcoin investors have been accumulating, using the dip as a buying opportunity for whenever prices fall, but that source of buying pressure is being offset by more short-term traders who have been opportunistically moving in and out of markets.
The convergence of these two conflicting forces, long-term holders on the one hand, and short-term traders selling the mini-rallies in Bitcoin, has meant that whatever Bitcoin is traded, has stayed relatively glued to a very tight trading range, unable to capitulate and unable to rally either.
Like practically every other asset class this year, Bitcoin specifically, and cryptocurrencies in general are beset by a host of macroeconomic forces well out of their control – from the Russian invasion of Ukraine, to tightening monetary policy, against a backdrop of slower growth globally, there are overall no shortage of reasons to be bearish on risk assets in general.
But Bitcoin enjoys more than a single investment narrative, and some investors have been doubling down on the cryptocurrency on bets that an inflationary environment will see the nascent asset class come into its own as a hedge against higher prices and lower growth.
To be sure, U.S. tech stocks have lost around a fifth on average from recent highs, while Bitcoin has been relatively flat, suggesting that investors remain divided on the value of the cryptocurrency as well as its role in a typical portfolio.
Because cryptocurrencies are not beholden to any government, their value was proved when Russia’s banks were locked out of the SWIFT messaging system, an integral function that enables cross border transfers.
Millions of Russians who suddenly found their rubles turning worthless overnight, turned to cryptocurrencies to stem the bleed, while Ukrainians have used donations in cryptocurrencies to buy everything from flak jackets to helmets, to equip and defend themselves against the Russian onslaught.
On-chain Bitcoin data, which is transparent and searchable by anyone, reveals that digital wallet addresses holding anywhere between 1,000 to 10,000 Bitcoin saw a dramatic increase shortly after Western sanctions were announced on Russia.
