Bitcoin‘s annual volatility has recently dipped below that of top tech stocks like Tesla, Meta, and Nvidia, positioning it closer to a more mature and stable asset class.
As of May 11, the 1-year realized volatility of Bitcoin was approximately 44.88%, which is lower than the over 50% seen in these major tech stocks.
This marks a significant shift from Bitcoin’s earlier days when its volatility exceeded 200%, reflecting the usual traits of a new asset class experiencing high capital inflows.
The decreasing volatility signifies Bitcoin’s evolution, as Fidelity Investments reports.
Notably, Bitcoin showed lower volatility compared to 33 out of approximately 500 S&P 500 index companies.
A pivotal observation made in October 2023 highlighted that “Bitcoin was actually less volatile than 92 of the S&P 500 stocks in October of 2023 when using the 90-day realized historical volatility figures.
Some of these names are also large-cap and mega-cap stocks.” This suggests a growing stability relative to significant market players.
Bitcoin’s stability trajectory mirrors that of gold in its early years, which initially faced high volatility followed by gradual stabilization.
Gold, after its decoupling from the U.S. dollar in 1971, saw its volatility soar above 80 in the 1970s, nearly double that of Bitcoin’s in April 2024.
However, as gold settled into an established asset class, its volatility lessened, paralleling Bitcoin’s current path toward integration into the broader financial landscape.
Recent comparisons further underscore Bitcoin’s maturation.
Its current volatility is around 44% at price levels above $60,000, significantly lower than the 80% noted three years prior when prices were similar.
Fidelity researcher Zack Wainwright explains the implications, stating, “Bitcoin was nearly half as volatile in 2024 at $60,000 when compared with 2021.
When putting this all together, a thesis pointing toward a growing acceptance of Bitcoin due to potential maturation begins to emerge.”
The reduction in volatility has often preceded substantial price surges, indicating an increase in investor confidence and accumulation behavior.
This pattern was observed in December 2023, when Bitcoin’s reduced volatility of about 43% was followed by a 75% price increase, driven by demand for spot Bitcoin ETFs in the U.S., which had attracted $11.68 billion by May 11.
Looking ahead, significant investment inflows are expected from major institutional players, including sovereign wealth funds and pension funds, engaging with Bitcoin ETFs.
BlackRock’s Robert Mitchnick and independent market analyst Scott Melker suggest that the growing institutional involvement, driven by Bitcoin’s newfound stability, could propel its price to between $100,000 and $150,000.
Melker emphasizes the importance of patience, noting, “The massive institutional flood of money that will drive bitcoin to all-time highs.”
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