How is Institutional Adoption Affecting Bitcoin's Price?
Institutional adoption is increasingly recognized as a key factor in stabilizing Bitcoin's price. Cathie Wood, CEO of ARK Invest, suggests that as more institutions participate in the cryptocurrency market, Bitcoin faces less volatility. Historically, Bitcoin witnessed drops of 75% to 90%, but recent trends indicate a decline in these extreme fluctuations. Currently, Bitcoin's volatility has decreased to around 30%.
Wood highlights the shift in Bitcoin's role from being a risk-off asset during crises, such as the European sovereign debt crisis, to a more stable risk-on asset. She believes that recent market dynamics may have marked a low point for Bitcoin, supporting a transition in its price trajectory.
Will Bitcoin Outperform Gold in 2024?
Wood anticipates that Bitcoin may outperform gold as market conditions change. Gold has surged nearly 60% year-to-date, primarily perceived as a hedge against geopolitical risk. In contrast, Bitcoin’s price has declined roughly 20% in the last three months. However, Wood predicts a reversal of this trend next year, expecting that Bitcoin will regain its position as a preferred investment.
The historical context supports this view. During periods of significant innovation, such as from the early 80s to late 90s, gold prices fell as new technologies emerged. Wood believes a similar pattern could emerge as Bitcoin reasserts itself as a risk-on asset amid evolving market environments.
What to Watch in the Market?
As Bitcoin currently trades around $94,000, with a recent uptick of 4% in the past 23 hours, investors should closely monitor upcoming events. The Federal Open Market Committee's decision tomorrow is significant, marking this year’s final rate cut. Market reactions could further influence Bitcoin's performance, aligning with Wood's expectations and paving the way for potential gains.