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The world is upside down. Is bitcoin stable now? Or is everything else suddenly extremely volatile? As the planet descends into chaos, bitcoin remains in a weird limbo that is uncharacteristic of the asset and does not seem to end. That’s both how it feels and what the stats say. In the latest ARK Invest’s The Bitcoin Monthly report, they put it this way: “bitcoin is in a tug-of-war between oversold on-chain conditions and a chaotic macro environment.”
But what about the numbers? The statistics back up the statement: “For the third straight month, bitcoin continues to trade between investor cost support ($18,814) and resistance at the 200-week moving average ($23,460).” Three months in that range seems too much. Something must be given. But that’s what everyone’s been thinking for ages and we’re still here.
The Dollar Milkshake Theory
Bitcoin is of course less volatile than usual, but the main factor here is that the whole world is falling to pieces. Every company is in the red, especially the techies, and all the currencies of the world except the dollar fell off a cliff. Are we seeing “the dollar milkshake theory” playing out before our very eyes? It sure feels that way. Global central banks are printing bills like there is no tomorrow, and that extra liquidity is there for the stronger currencies.
According to professional investor Darren WinterThe dollar milkshake theory sees central bank liquidity as the milkshake, and when the Fed’s policy moves from easing to tightening, they trade a metaphorical syringe for a big straw that sucks liquidity from global markets. If that’s what we see, then what happens? Back to The Bitcoin Monthly, ARK says:
“As macro uncertainty and USD strength have increased, foreign currency pairs have been negatively impacted, while bitcoin has remained relatively stable. Bitcoin’s 30-day realized volatility is close to that of the GBP for the first time since October 2016 and EUR”
BTC price chart for 11/07/2022 on Bitstamp | Source: BTC/USD on TradingView.com
Bitcoin vs. Other Assets in October
The macro environment has been so bad lately that bitcoin is believed to outperform stocks. The facts are that in October, for the first time since 2020, “Bitcoin’s 30-day volatility aligns with the Nasdaqs and the S&P 500s.” And we know that past performance doesn’t guarantee future results, but “the last time bitcoin volatility fell to match the rising volatility of stock indices was in late 2018 and early 2019, prior to bullish moves in BTC price. “
Let’s not kid ourselves though, bitcoin hasn’t fared well. The thing is, not much is thriving out there. Especially in the technical sector. “The price drops from all-time highs in Meta (-75.87%) and Netflix (-76.38) have those of bitcoin (-74.46%). To a lesser extent, Amazon is also proposing a correction proportional to that of BTC’s “usual” volatility (-48.05%).
According to The Bitcoin Monthly, the situation suggests “the severity of the macroeconomic environment and bitcoin’s resilience against it.”
However, the only constant is change. Bitcoin’s stability suggests a violent breakout, both up and down. The whole world can’t stay red forever, something or someone has to rise above the crowd and show everyone how it’s done. We’ve been waiting for a solution for ages, and we’ll probably have to wait a little longer. There will be movement. When we least expect it, probably.
Featured Image: Bitcoin 3D logo from The Bitcoin Monthly | Charts by TradingView