Bitcoin often faces criticism for being an incredibly volatile asset. While it is actual price swings are not uncommon, several other asset classes have it even worse. Moreover, the volatile nature of the world’s leading cryptocurrency is what makes it so exciting.
Is Bitcoin Really Volatile?
There are many different ways to look at financial markets, whether cryptocurrencies, stocks, precious metals, or other options. No market can remain stable 100% of the time, which would ruin the fun for traders. If there is no room for profit or losses, there would not be any need for financial markets as we know them today.
While most markets tend to make fewer headlines due to price changes, they all ace some volatility. Looking at Bitcoin’s 60-day volatile trend, it sits at 15.6%. A modest number, given how the market behaved over the past few years. In a year with new all-time highs close to $60,000 per BTC, a 15.6% volatility index is not terrible.
Most of this volatility stems from Bitcoin’s meteoric price rise in the first two months of 2020. The price has hovered below $50,000 ever since, yet any move up or down can easily have significant consequences. It is also crucial to note that a 1% price change currently represents $470 in value per BTC. When dealing with higher values, there will be more price changes.
It is interesting to note how gold is reporting some minor volatile waves as well. Although the precious metal’s bull run has seemingly come to an end recently, there is still plenty of market momentum. For now, that momentum is mainly bearish, but that is expected somewhat.
Zooming Out For A Clear Picture
Over 60 days, anything can happen to any financial market. Getting a better and broader perspective is paramount before drawing any conclusions. Comparing the Bitcoin volatility to other asset classes over the past year shows the world’s leading cryptocurrency is not behaving abnormally.
More specifically, the chart depicts tremendous price swings for emerging currencies, oil, gold, US stocks, US real estate, and the USDEUR FX rate. As mentioned earlier, there is no such thing as a stable market. Calling out Bitcoin for its price changes while ignoring all other markets is incredibly shortsighted.
That being said, it is evident that Bitcoin is in a league of its own in this regard. It is always in a higher “range” than other assets and markets, but it also provides an entirely different price potential. For some traders and speculators, it may be more than they can stomach. That is not something to be worried about, but it doesn’t change the facts outlined above.