• This article discusses the perceived decrease in Bitcoin’s volatility, as well as its comparison to other assets and currencies.
• The data shows that while there was a decrease in Bitcoin’s volatility until 2015, it has not improved since then.
• On a weekly basis, Bitcoin’s average volatility compared to USD was 26 times greater than the euro last year.
Overview
This article examines whether Bitcoin’s volatility is decreasing over time by analyzing its realised volatility compared to other assets and currencies. It finds that while there has been a decrease in Bitcoin’s volatility until 2015, it has not improved since then. On a weekly basis, Bitcoin’s average volatility compared to USD was 26 times greater than the euro last year.
Bitcoin Volatility
The chart of realized volatility shows two things right off the bat: that Bitcoin was volatile until 2015 when it was still an emerging internet currency with low liquidity; and that there may be signs of slight improvement in terms of its calming down from 2021 to 2023.
Comparison With Other Assets
In comparing Bitcoin returns to the Nasdaq and individual stocks, the data shows that it blows them out of the water in terms of its higher levels of volatility.
Volatility vs Euro
On a weekly basis, Bitcoin’s average realised volatility against USD was 26X greater than the euro last year – up from 19X in 2021 and 16X in 2020. This indicates that while some progress may have been made, it is still significantly more volatile than major fiat currencies such as the Euro or US dollar.
Conclusion
Overall this article finds that while there has been some progress made in reducing Bitcoins‘ volatitlity over time – particularly since 2015 – it is still significantly more volatile than major fiat currencies such as the Euro or US dollar on a weekly basis.