Bitcoin could soon become less volatile than US stocks, gold, real estate

Since the beginning, one of the biggest criticisms of Bitcoin — and indeed, the entire cryptocurrency space — has been its great volatility. But an interesting trend has emerged in recent years: Bitcoin’s volatility is decreasing while that of other traditional assets is increasing…

While mainstream assets have seen continued stretches of higher volatility in previous times of uncertainty, gold, stocks, and real estate have been remarkably stable for the last few years.

Bitcoin has seen a recent spike in rolling 1-year volatility due to major price movement toward the end of 2020, but overall the trend is toward stability in the midst of COVID-19 induced uncertainty. Bitcoin is less volatile almost by an order of magnitude compared to just three years ago.

Conversely, COVID-19-related uncertainty has sent US stocks, gold, and US real estate to levels unseen in recent years.

This chart comes from pseudonymous Bitcoin data analyst Willy Woo:

To be sure, Bitcoin is still more volatile than all of the assets in this chart, and by a substantial amount. But Bitcoin continues its march toward stability nonetheless. This is likely partly attributable to institutional adoption, and will only further the same.

Here’s another look at the volatility chart, this time comparing Bitcoin and gold on a linear scale:

It’s clear that Bitcoin is still a wildly volatile asset, but the long term trend is becoming more clear. And as you can see on the logarithmic Bitcoin price chart, Bitcoin is tracking on an as-yet-undefined asymptote, reflecting that while price volatility is decreasing, price itself continues to steadily increase of the long term.

Support the site by checking out Swan Bitcoin and using their services to purchase Bitcoin. They also offer a free book that does a great job of covering the basics of Bitcoin.

Show More Comments