Bitcoin Volatility Soaring: Is it Time to Rethink Your Strategy?

Summary

• Bitcoin’s average volatility vs USD on a weekly basis was 26X greater than the euro last year, up from 19X in 2021 and 16X in 2020.
• The data shows that Bitcoin’s volatility fell until 2015, but it has not improved since then.
• When comparing the asset’s returns to the Nasdaq and individual stocks, it blows them out of the water.

Bitcoin Volatility is Still High

The perception is that Bitcoin’s volatility is coming down, however the data fails to back this up. When looking at the annualised realised volatility over a rolling 30-Day window, it was all over the place until 2015. From then on, it looks like Bitcoin may be calming down a little bit – however when compared to other assets such as the euro or Nasdaq, its volatility still blows them out of the water.

Volatility Compared to Euro

When comparing Bitcoin’s average volatility vs USD on a weekly basis to that of the euro last year, it was 26 times higher – up from 19X in 2021 and 16X in 2020. This means that for every dollar moved by Bitcoin, there were 26 dollars moved by euro on a weekly basis. Clearly these numbers are quite different and show how much more volatile Bitcoin remains compared to other assets.

Volatility Compared to Other Assets

When comparing Bitcoin’s returns with those of other assets such as the Nasdaq or individual stocks, again its volatility blows them out of the water. The same can be said for gold which also remains very volatile compared to other assets including currencies such as USD or EURO. This further demonstrates just how much more volatile Bitcoin remains compared to traditional stores of value and currency pairs alike.

Conclusion

In conclusion, while there may be some evidence that suggests that Bitcoin is calming down somewhat since 2015 – when compared with other assets such as currencies or stock markets – its volatility still far exceeds anything else available today. This highlights why many investors remain wary about investing in what they consider an extremely risky asset class – one which could result in large losses if handled incorrectly or without adequate understanding of its inherent risks and rewards.