Not because we’re seeing volatility per se – that is not the case - where Bitcoin's daily close-to-close percentage changes are seldom greater than 4%. But because of the absolute momentum and trending price action. This is not just true of Bitcoin, which has closed higher in 16 of the past 21 sessions, but in Ethereum and the broad suite of altcoins too.
The market looks at the barrage of positive news flow and adds length. There is a chase underway, as well as structural flows from market participants (and algo’s) that buy simply because the price is moving higher.
Traders look at the risk that could cause a significant liquidation and for the first time in a while see a limited number of factors that could cause significant volatility. Notably, many believe there is now significantly reduced regulatory risk, which for years has been the biggest concern with holding bullish positions.
In fact, many say the biggest risk to near-term upside is indeed profit taking, or an event outside of crypto, such as a macro event (higher inflation for example), that causes equity and risk to roll over and volatility measures to spike.
The question many are now asking is how long until we see the November 2021 all-time highs being taken out. It also begs the question of when euphoria kicks in. I don’t see it just yet, so it feels like pullbacks will be shallow and well-supported.
Let’s consider the price catalysts that appear front of mind:
While some will say the rally is simply traders seeing the same factors pushing up high beta equity, there are some credible factors that crypto traders will point to that are specific to the crypto complex.
(Source: Coinglass)
As it stands crypto is seeing a clear momentum move and getting big attention from traders –some will question how long until new all-time highs, others will start to hedge, and others feel we are getting closer to a point of euphoria – it promises to be interesting trading.
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