Bitcoin’s Long-awaited Stabilization Period May Have Finally Started

Bitcoin’s Long-awaited Stabilization Period May Have Finally Started

Bitcoin’s (BTC) price has been relatively stable over the past couple of months, trading in a modest range between $35,000 and $45,000. While this may seem like a calm period compared to the cryptocurrency’s history of volatility, it’s actually part of a larger developing trend that began earlier this year.

Since bitcoin reached its all-time high price of nearly $69,000 in November, there have been several distinct ranges of stability followed by sharp declines. Each time, bitcoin’s price has recovered somewhat to only enter into another period of instability. The current range however, which started on January 10, is actually not quite similar to the one seen back in late 2021 before the next nosedive occurred.

So what does this mean for BTC hodlers?

According to veteran futures and options trader Jim Iuorio, bitcoin’s current range signals the potential beginning of a long-awaited period of stabilization. In a March 17 analysis of the apex cryptocurrency for the CME Group, Iuorio explained that BTC’s push/pull approach which seeks to support the crypto’s transitions out of its extreme volatility pattern, could be influenced by several key factors.

One of these factors, according to him, is the greenback’s ability to rally during periods of geopolitical tensions.

The correlation here is that despite a weakening U.S. Dollar and high inflationary pressures as a result of ongoing geopolitical risks, bitcoin has been gaining a lot of traction as an investment option. While some people remain skeptical about its stability, others see it as a way to protect their money against inflation. In times of economic uncertainty, bitcoin can be a safe haven for your money.

Incidentally, bitcoin hit its all-time high of $69K on Nov. 11, 2021. The high occurred on the same day that the U.S. reported its highest inflation level in three decades.

The second factor Iuorio points out is the Federal Reserve’s pledge to keep raising interest rates as it accelerates the reduction of its bond buying program.

The U.S. Dollar Index (DXY) fell to its lows of the day following the Fed’s 25 basis points rate hike on Wednesday, March 16, and its signaling of six more hikes in 2022. The greenback lost ground on Thursday as well, testing 2-wk lows below the 97.80 area. This morning however, the index is up 0.26%, printing above 98.25.

Finally, the third factor for BTC stabilization is crypto regulation, which is guaranteed to be coming soon following the Biden administration’s recent executive order on the industry.

As cryptocurrencies like bitcoin, Ether (ETH) or Solana (SOL) become more regulated and transparent, people will be more comfortable with using them as true units of exchange.

“On the other hand, we have China and Japan both adding stimulus in the face of an economic slowdown and several headlines about governments seizing bank assets,” Iuorio added. [via Finbold]

Iuorio explained that hodlers argue that the key element of crypto is its ability to store and transfer wealth outside of the banking system, which can be incredibly handy in times of financial instability. So for those asking what’s the big deal with bitcoin and other cryptocurrencies? Well, for some, it’s a way to protect and avoid their assets from these seizures.

Speaking of BTC abilities. As we have reported, Bloomberg’s senior commodities strategist Mike McGlone said in a recent tweet that 2022 “may be primed for risk-asset reversion” and could ultimately mark bitcoin’s “maturation” as an established asset class.

In his opinion, McGlone, who remains firm in his believe of BTC being on the verge of a major evolutionary shift, also argues that in terms of returns – both gold and the stock market might not be able to keep up with the digital asset.

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