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Swings in the price of bitcoin are famous for being exceptionally chaotic when compared to old-school asset classes like precious metals, fiat currencies and blue-chip stocks. But the world’s largest cryptocurrency by market capitalization is currently less volatile than shares in tech giants Amazon and Meta.

The so-called annualized volatility of bitcoin, which tracks the standard deviation of the last 30 days of daily percentage change in price, is currently resting around 32%, according to The Block Research. That’s notably low, given the asset’s all-time average price volatility of 71%. 

The cryptocurrency has seen the uncommonly low levels of volatility amid what many traders call the “summer lull,” a period traditionally marked by lower trading volume. This summer, in fact, is on track to be the calmest one since 2020.

The Block Research analyst Rebecca Stevens said bitcoin experienced a summer of pronounced instability in 2021 after its value plummeted in May before recovering by year’s end. Last summer, bitcoin’s price and stability were both negatively impacted by a general downturn in crypto and the Terra-Luna fallout, she added.

While bitcoin volatility hasn’t dipped to levels low enough to rival rock-solid assets like gold and Apple stock, at its current level, the cryptocurrency is enjoying more stability than both Meta and Amazon shares, which sit at volatility rates of 44% and 34%, respectively.

The volatility rate of the Dow Jones Industrial Average is currently 13%, as a matter of comparison.

Bitcoin volatility versus Apple shares and gold

Bitcoin volatility versus Amazon and Meta shares

A calm before the storm?

Laura Vidiella, a vice president at crypto investment firm LedgerPrime, doesn’t think bitcoin’s recent respite from volatile price eruptions represents a major shift.

“Low volatility is a reflection of how the market sees price movement at this point in time given the information the market has,” she said. “But I don’t see it becoming into a new norm just yet and expect big price swings together with volatility to return this fall.”

If Vidella’s prediction proves true, it could coincide with Maelstrom co-founder and CEO Arthur Hayes’ own expectation of an upcoming bitcoin price surge.

“The fireworks and the real bitcoin bull market will begin in the late third and early fourth quarter of this year,” he wrote this week. 

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The Blockchain Association called the U.S. Treasury Department’s decision to sanction Tornado Cash “unprecedented and unlawful” in a new amicus brief it filed with DeFi Education Fund.

The Treasury Department last year sanctioned Tornado Cash, the open-source software that can be used to anonymize transactions on the Ethereum blockchain. The move was met with pushback by crypto advocates, including the Washington, D.C. policy nonprofit Coin Center, which filed a lawsuit against the Treasury Department over the sanctions. 

The Blockchain Association, a crypto advocacy group in D.C., filed a legal brief in support of Coin Center’s case this week, alongside DeFi Education Fund, a nonpartisan research and advocacy group.

“It’s critical to recognize that Tornado Cash is simply a tool – punishing the tool itself simply because it can be used by anyone, including bad actors, runs contrary to the values this country was founded upon,” Blockchain Association CEO Kristin Smith said in a statement.

“Blockchain Association stands with Coin Center, advocating for the responsible and lawful use of blockchain technology. Regulatory actions should only be targeted at bad actors who abuse this tool for illegal purposes,” Smith added. 

Crypto exchange Coinbase is backing another case targeting the department over the sanctions. The Blockchain Association has also filed an amicus brief in that case. Both lawsuits argue that the government overstepped its authority by targeting software, rather than an individual or entity, among other issues.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The miner’s bitcoin production per unit of computing power was low in April.

In a statement, the trade group’s CEO Kristin Smith, said that regulatory actions should only target bad actors.

Crypto exchange volumes continue to fall, according to The Block’s Data Dashboard.

Drawn from The Block Research’s Legitimate Volume Index, May saw exchanges post $307.4 billion in volume — a decline of 23.2% from April.

Exchange volumes have slid in recent months, with May’s numbers continuing that trajectory.

According to The Block Research director Lars Hoffmann, the May figure represents the lowest level since November 2020.

Binance claimed a 71% market share for May, followed by Coinbase and BTSE at 8.7% and 5.1%, respectively.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

A new draft bill from senior House Republicans in the U.S. Congress seeks to provide a path for a digital token to go from being treated as a security to a commodity as part of an effort to provide more flexibility and brighter guidelines for digital assets within in the country.

The discussion draft released by House Financial Services Committee Chair Patrick McHenry, R-N.C., and House Agriculture Committee Chair Glenn ‘G.T.’ Thompson, R-Pa., is the latest effort to better illuminate the road around how digital assets fit into existing U.S. financial law, while creating accommodations for the unique aspects of blockchain-based tokens.

Among other provisions, the bill would give a clear definition as to when a project is sufficiently decentralized to no longer have its tokens qualify as investment contracts, a longstanding point of tension for crypto projects in the U.S.

McHenry and Thompson intend the draft to be the latest step in negotiations with House Democrats and Senate counterparts. Committee staff familiar with the legislation made clear they want the draft bill to advance talks, with the hope of having a new law this year governing the market structure of digital assets in the U.S., rather than this version being a take-it-or-leave-it document.

What the reception will be from other policymakers and the administration of President Joe Biden remains to be seen and will be key to the future prospects of the legislation’s chances of passing. U.S. financial regulators, led by Treasury Secretary Janet Yellen, called for new laws around digital assets last year.

A groundwork for passage 

Committee staff have been in touch with the offices of several senators active with crypto legislation to lay the groundwork for passage through that chamber of Congress in addition to the House. That outreach has included contact with staff for Senate Agriculture Committee Chair Debbie Stabenow, D-Mich., and Sen. John Boozman, R-Ark., the top Republican on that committee, and Sen. Tim Scott, R-S.C., the top Republican on the Senate Banking Committee and a newly announced presidential candidate.

In a brief interview with The Block, Sen. Cynthia Lummis, R-Wyo., expressed interest in the McHenry and Thompson-led effort, saying she and Sen. Kirsten Gillibrand, D-N.Y., were pausing reintroduction of their own bill to see what came in the House Republican document.

While security investments like stocks and bonds require disclosure documents for transparency, some of the loudest voices in the digital asset industry argue that existing securities laws should not apply to them with rules surrounding the pathway from a centralized founding and capital raise to a decentralized platform emerging as a key point of contention. Rampant fraud in the space, meanwhile, has resulted in the Securities and Exchange Commission cracking down with well over 100 successful enforcement actions.

The legislation under negotiation in the U.S. House of Representatives is an effort to create a more stable, investor-friendly market structure for digital assets in the U.S. while addressing concerns that securities laws could be too rigid for the more worthwhile crypto projects. 

Decentralized definition

The bill creates a definition of a decentralized network, in which a token could transition from being treated as a security to a commodity, an investment category with lower disclosure requirements.

Under the current language of the bill, which is subject to further negotiation and change, a decentralized network would be one in which no person had control for at least a year prior, no issuer or decentralized organization owned more than 20 percent of the tokens affiliated with the network, and no marketing or issuance for the project was done in the three months prior to certification as a decentralized network.

Any token issuances made within 12 months would also have to be to end users.

Private sales of tokens for capital raises would still be allowed to help raise funds for projects well before the point at which they could be reclassified as decentralized. Those private sales, which already happen, would be allowed under the same framework as private securities offerings.

The SEC and Commodity Futures Trading Commission, as federal markets regulators, would determine which projects qualify as decentralized. If a project became concentrated again, the SEC could take away the decentralized classification.

If the bill as written were to become law, trading platforms for most tokens would also have a streamlined path to becoming registered as alternative trading systems with the SEC. Payment stablecoins are exempted from securities designation, and McHenry and Rep. French Hill, R-Ark., have drafted legislation to create a comprehensive framework for that class of digital assets.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Crypto exchanges would gain a path to registering with the U.S. Securities and Exchange Commission (SEC) and would be able to trade digital securities, commodities and stablecoins all in one place under a proposal from the Republican chairs of the two House of Representatives committees trying to hash out a bill.

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