BTC/USD: what's going on with the Bitcoin?

The digital currency is currently in an extensive-term consolidation zone, which makes many traders wonder what happened to the Bitcoin's volatility.

Once one of the most volatile markets, it now trades mainly between $7,725 and $10,350, making it difficult to trade its price movements.

For almost 60 days, the price of Bitcoin has failed to break through and stay above the magic $10,550 level. In the meantime, another halving took place, attracting a large number of individual buyers.

Possible explanations for the consolidation of Bitcoin

Before we begin, it is worth mentioning that cryptos are favoured by short-term traders (scalpers) and medium- to long-term traders. However, regular investors (i.e. swing traders) are likely to be less active on cryptocurrencies because most individual traders are holders (i.e. they buy Bitcoins or other crypto assets and hold them indefinitely).

As a result, the market is mainly driven by speculators and short-term holders. As institutional investors are still reluctant to come forward in large quantities, price action is driven by scalpers. In general, the transaction volume of small players is rather low, and therefore unable to vary prices significantly.

Since last month's halving, the Bitcoin price hasn't really evolved. It simply consolidates in a straight line, and over longer periods of time it continues to form lower peaks as the value of 13,000 on the last peak has increased.

It can also be said that Bitcoins and the U.S. equity markets have been directly correlated since the beginning of the virus situation. As a result, rather than having a diversification effect relative to a stock market portfolio, Bitcoins increased risk exposure.

It is important to remember that the cryptocurrency market is not regulated. Therefore, price manipulation cannot be ruled out.

In the future, as the virus situation affects the world's economies, the need for liquidity will become stricter, and holders will find it difficult to find a logical excuse to not sell some of their Bitcoins.