The rise of bitcoin in the past has been attributed to things like inconsistencies and issues in the fiat market for currencies or worries about traditional stocks and securities not maintaining a consistent value.
For instance, analysts like Willy Woo say that he doesn’t think bitcoin is going to enter bear market rankings at the time of writing.
As you learn how to trade bitcoin, you’ll discover that all kinds of factors can change the market’s general attitude towards it.
Unlike investing in a traditional currency, it isn’t issued by a bank or government, which means the monetary policy, economic growth measures, and inflation rates aren’t going to impact the growth levels in the same way.
However, Willy Woo notes that, looking at the network to value metric for transactions, which you can calculate by dividing the market cap of Bitcoin by the on-chain transactional volume, the BTC environment is currently undervalued by a massive level.
Woo believes that the bull market for bitcoin will stay intact, but the price expansion might be delayed if investors continue to take a risk-off approach to the space, and move more of their capital into the US dollar.
In the three months between October 2017 and the January of the year following, volatility in bitcoin’s pricing raised to around 8%, representing around twice the volatility levels of the currency in January 2020.
Woo noted that he is concerned a major correction in equities – one of the markets suffering in the US right now – might pull the bitcoin value downwards, regardless of what on-chain fundamental statistics predict.