Bitcoin Volatility

Volatility is a measure of how rapidly and unpredictably change occurs, a risk assessment. By comparison with other assets, such as gold (1.2%) and the dollar (1.8%), Bitcoin (3.13%; 30-day est.) is a risky investment indeed. That being said, what is interesting is the change to Bitcoin’s volatility over time.

In the early days, while Bitcoin was just beginning to gain traction, it was difficult to assign meaningful numbers to its volatility since the prices fluctuated so drastically but the absolute values were so low. Bitcoin could have gone from $0.000125 to $0.000190 in one day but that 65% rise in valuation did really amount to much. But, remember the fall of 2017 when Bitcoin’s price soared to $19,500? The volatility index was hitting values of 7.5% and 8.0%. Since then we watched as Bitcoin’s value returned to earthly amounts like $4500 and $3800.

Now, Bitcoin’s price is steadily rising again ($10,350 as of 9/11/2019). Meanwhile, Bitcoin’s volatility index continues to fall. This is a good thing. If Bitcoin is to be the asset class of world finance, the volatilty index has to be equal or less than that of gold today. It looks like we’re going that way.