Bitcoin’s Volatility Is Falling and This Will Continue as It Matures: Fidelity

In his analysis, Zack Wainwright pointed out that new assets usually require some time before their prices are established through discovery, and as they mature, they eventually reach lower levels of volatility. He made a reminder that even a commodity like gold demonstrated significant price fluctuations when the US terminated the gold standard in the 1970s.

In the past 15 years, Bitcoin has displayed growing stability, with volatility levels reaching unprecedented lows on an annual basis, according to the report.

“The volatility of bitcoin has consistently decreased throughout its existence, and we anticipate this pattern to persist as the cryptocurrency continues to develop further.”

According to Fidelity’s analysis based on 90-day realized historical volatility, Bitcoin was less volatile than 33 of the S&P 500 companies as of the present, and it had been less volatile than 92 of the stocks in the index back in October 2023.

Over the past two years, Bitcoin’s price swings have been more subdued than those of Netflix (NFLX). When put next to the “magnificent seven,” a collection of top-performing stocks, Bitcoin’s volatility doesn’t stand out as unusually high.

As an analyst, I’d observe that since cryptocurrencies represent an emerging asset class with a relatively small market capitalization, they tend to exhibit greater volatility due to new waves of investment. Yet, as the size of this asset class expands and its total market cap increases, the influence of fresh capital inflows is anticipated to diminish because it will be getting absorbed into a larger financial pool.

In January, the United States granted approval for Bitcoin spot ETFs, which was anticipated to reduce Bitcoin’s price fluctuations. However, despite this development, Bitcoin experienced a significant decrease of more than 16% during the previous month.

“The new investments entering the market won’t significantly impact buyers or sellers, nor will they cause substantial price movements,” the report stated.