Bitcoin and Ethereum Stable for Over a Year: Is Crypto Volatility Woes Over?
Word Bitcoin is the new stablecoin. Indeed it has, and behind this observation are solid metrics and research findings.
Recently, the Chicago Board Options Exchange (CBOE) released their findings demonstrating that Bit-coin volatility is lower than that of Amazon and a majority of FANG stocks. Bitcoin and similar digital assets are, or were, known to move by wide margins.
Low Volatility: CBOE and BVI Trackers
The CBOE clearly demonstrated that Bitcoin’s 20-day historical volatility had dropped to 31.5 percent and this was lower than that of Amazon (35 Percent), Netflix (52 percent), and a long list of other publicly traded stocks like Nvidia whose 20-day volatility stood at 40 percent.
Following this is the visible drop in standard deviation. According to MarketWatch, the standard deviation of Bit-coin dropped from $4,640 or around +/-42 percent in January to $475 or +/-7.3 percent in October.
Standard deviation is a measure of dispersion of price from the mean, and the higher the dispersion, the greater the standard deviation. As such, this finding clearly demonstrated that there is a taper in volatility as standard depreciation decreased by a factor of 10.
Coincidentally, this finding meshes well with statistics drawn from the Bit-coin Volatility Index. The Bitcoin Volatility Index (BVI) measures the standard deviation of daily returns within a 30-and 60-day window and the BVI is an indicator of volatility based on Bitcoin’s historical prices. The BVI tracks the volatility of Bitcoin prices in USD and the latest 30-day estimate puts Bitcoin’s volatility at 1.50 percent while the 60-day estimate is at 2.05 percent. By comparison, the volatility of Gold stands at 1.20 percent and the average volatility of fiat oscillates between 0.5 percent to 1.0 percent during the same time frame.
Bitcoin is not the same coin whose prices are stable. Ethereum’s weekly volatility stands at 2.69 percent according to data from Bit-Mex.