TokenPost
Hello. This is the TokenPost podcast. Today, we will look at the Kai Korea Research analysis posted on TokenPost on July 18th. Bitcoin has recently shown a truly record-breaking price increase, surpassing $123,000. However, it's not just that it went up, but the market atmosphere seems somewhat different from before. Through this research, we will delve deeply into the interesting changes hidden behind that price increase, especially the volatility trends and core market structural changes that you must know.
Host
Yes, that's exactly right. This current upward trend is interesting in that it's occurring in an environment of quite low volatility, unlike past sudden surges. In other words, while prices are rising, the market's instability has actually decreased.
TokenPost
Ah, what exactly does it mean that the volatility level has decreased? Can you explain it using the realized volatility indicator? I was thinking that Bitcoin's characteristic was always about price fluctuations.
Host
That's right. It was like a fixed notion, but the trend is definitely changing. Looking at BTC's 30-day realized volatility, it's now less than 40%. The average in January 2022 was around 51%, so it has become much lower.
TokenPost
Wow, it has stabilized quite a bit, from 51% to less than 40%.
Host
Especially since the physical ETF was approved in the US in January 2024, this 30-day volatility has almost never exceeded 80%. It even dropped to around 25% in June last year.
TokenPost
I see. So volatility has decreased while prices are rising. From an investor's perspective, this might be an even more attractive situation. You can bear less risk while expecting returns.
Host
Yes, exactly. There's an indicator called value at risk that shows the maximum expected loss over a specific period, and this value has been continuously declining since the beginning of the year.
TokenPost
Value is declining.
Host
Yes, for example, if I have Bitcoin, there would be a maximum loss estimate with a 95% probability in one day. Right now, that's around $200-300. However, there have been many days when the actual price increase was larger than this.
TokenPost
Ah, so the potential risk I must bear is becoming smaller than the expected returns I can actually gain. It can be seen as such a signal.
Host
That's right. We can interpret this as an environment being created where profits can be pursued within manageable risks.
TokenPost
This is a very interesting perspective. Is this changing from a high-risk, high-return image to a more stable growth asset? Could this change be a factor that brings more institutional investors?
Host
Yes, I believe there's a high possibility. The increased predictability of risk levels is very attractive to institutional investors. Looking at the options market, short-term call options, which bet on price increases, show a high preference. This shows that market sentiment is somewhat positive.
TokenPost
I see. It seems like there's a structural change in the market, a shift in the center of gravity. There are also analyses saying that the US market's influence continues to grow.
Host
That's a really important change. The proportion of Bitcoin dollar trading volume occurring during US trading hours has already exceeded 55%.
TokenPost
55%? Wasn't it 39% in 2020? That's a huge increase.
Host
Yes, that's right. But what's even more interesting is that the concentrated trading time has changed. In the past, trading was heavily concentrated around the US market closing time, around 4 PM Eastern time. However, this year, trading volume is highest during market opening hours in the morning.
TokenPost
In the morning? What does that mean?
Host
This might suggest that the influence of physical ETF trading or sophisticated algorithmic trading by institutional investors is gradually increasing.
TokenPost
I see. The flow led by the US market is becoming stronger. What about other markets? Are there any changes in the Euro market or elsewhere?
Host
Oh, that's an astute question. We should naturally look at markets other than dollars. The growth of the Euro market is particularly notable. The proportion of cryptocurrency trading based on Euros has nearly doubled in the last six months, from 6% to over 11%.
TokenPost
The Euro proportion doubled?
Host
Yes, and at the world's largest exchange, Binance, there was even a time when Ethereum Euro trading volume exceeded Bitcoin Euro trading volume.
TokenPost
It's amazing how Ethereum Euro is comparing to Bitcoin Euro. It seems like evidence that the market is definitely diversifying.
Host
That's right. We can read it as such a signal.
TokenPost
Looking into it, there seem to be many changes beneath the surface phenomenon of Bitcoin price increases. Volatility is decreasing, risk profiles are changing, institutional participation possibilities are growing, the trading time zone is shifting to the US ozone, the Euro market is expanding, and overall it sounds like a very positive trend. But are there any points we should be careful or mindful of?
Host
Of course there are. Just because market risks have decreased doesn't mean they've completely disappeared. Especially with macroeconomic variables that are hard for us to predict. For example, if the US administration suddenly changes trade policies, such factors can dramatically increase volatility at any time. So even if the market seems somewhat stable, we must always keep in mind that it can still be sensitive to such external shocks.
TokenPost
I understand. That means we must always be vigilant of potential risks even within stability. Today, through Kaiko Research, we've deeply examined the interesting changes behind the Bitcoin market. Now, setting new all-time highs amid low volatility. Do you think Bitcoin will gradually evolve into an investment asset with such stability? Or do you think its nature as an unpredictable risky asset will remain stronger? It might be good to ponder this for a moment. This concludes the TokenPost podcast.
