Chris Burniske explains why crypto investors are acting weird
The former head of the Arch Invest crypto branch has Opinion What is happening with the cryptocurrency market and why does it crave the volatility it has been 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.
Risk demand is not the only problem in the market. Volatility has always been one of the main drivers for the cryptocurrency industry, as retail traders provide more inflows into the market whenever they see the potential for higher returns.
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 the market?
Despite the need for market volatility, this can sometimes be a good thing for a certain layer of investors. Whenever the market fluctuates, it is easy to accumulate assets by buying them at the lower limit of the range 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.
