‘Bitcoin’s volatility, a feature, not a bug,’ but why exactly?

• Economic uncertainties drive investors to Bitcoin amid rising debt and geopolitical tensions.
• Experts highlight Bitcoin’s resilience and potential as a hedge against market volatility.

Amidst mixed economic signals, the debate persists: Is the economy strong or weak? Despite improving job numbers and falling inflation, rising debt, and debt-to-GDP ratios pose challenges.

Additionally, trillion-dollar debt increments have further complicated the economic narrative. All this has led to impacting various assets, especially Bitcoin [BTC]. 

Remarking on the same, Noelle Acheson, co-host at the Scott Melker’s podcast, noted,

“China is quite happy for its citizens to buy gold because gold is not a US dollar, a US economy asset, and the same reasoning could perhaps apply to Chinese citizens buying Bitcoin.” 

This shed light on the intriguing dynamics of wealth protection in countries like China, where citizens may seek refuge in assets such as gold and Bitcoin. 

What’s driving the Bitcoin price? 

Further in the conversation, Mike McGlone, senior commodity strategist at Bloomberg Intelligence, explored Bitcoin’s resilience to rising yields and shifting market fundamentals. He noted, 

“Compared to gold and S&P 500, Bitcoin trades with about three times the volatility. So initially it should go down and then we’ll see how it responds.” 

Adding to the fray, Dave Weisberger, Co-Founder and CEO of CoinRoutes noted,

“The other thing to understand about the Bitcoin price is the fact, that we’ve been in this trading range and we’re still in a trading range. Yeah, this weekend was the upside to the trading range and the weekend before was the downside to the trading range, but we’re still in a trading range.” 

This underscores that as Bitcoin continues to trade within a defined range, there’s growing investor sentiment and the cryptocurrency’s potential to serve as a hedge against traditional assets like gold.

He also emphasized the importance of volatility in Bitcoin, and remarked,  

“I think volatility in Bitcoin is a feature, not a bug.” 

Economic insights and concerns

Meanwhile, McGlone emphasized that while known factors like the Halving price are already factored into the market, volatility, and market normalization could impact the Bitcoin-gold ratio. 

Adding to the prevailing issues, Mike Novogratz voiced concern regarding the potential implications for the U.S. economy, emphasizing that if interest rates are cut, commodities such as gold, silver, copper, and even Bitcoin would experience unhindered growth. 

However, he cautioned that this action alone would not undo the Federal Reserve’s efforts to enhance the nation’s well-being. Hence, Novogratz’s sentiments underscore the urgent need for substantial spending cuts by U.S. politicians.

Amidst these developments, Bitcoin dropped by 1.92% and was priced at $70,670.24, highlighting the chance of a possible pullback.