Bitcoin’s volatility rates fall as daily returns move away from ‘extreme behavior’ territory


Bitcoin [BTC] has had a remarkable recovery since the start of the year, with significant positive growth in both price and market cap.

Analysis of the coin’s prices and returns show that Bitcoin’s volatility declined as monetization of the cryptocurrency increased. Since its inception, the cryptocurrency’s returns have been more evenly spread out, with daily returns shuttling between the ranges of negative 35 percent and a whopping positive 40 percent.

As the years have passed by, it was noted that Bitcoin’s volatility collated into smaller ranges, indicating a switch from extreme highs and lows to a calmer and controlled price movement.

Taking 2019 alone, the chart showed that the returns fell in the negative 10 to positive 10 range, a far cry from the previous lows and highs. The analysis suggests that the returns on the ‘king coin’ this year were mostly governed by the sideways movement carried over from the fag end of 2018.

The bear market’s influence was evident as the probability density of returns fell largely in the single digit area. We can use this data to make the case that Bitcoin today, is moving more and more towards the ‘store of value’ asset category, rather than being just a speculative trading commodity.

Despite the clamp being formed in terms of returns, Bitcoin has still managed to climb slowly and steadily on the price charts with some peaks providing more returns than mainstream commodities like gold and the S&P 500. Recent research stated that Bitcoin had significantly outperformed the S&P 500 in terms of long-term returns and risks attained.

The data stated that since 2013, any investment that comprised of 5 percent Bitcoin and 95 percent fiat currency gathered more returns and less risk than the S&P 500. Bitcoin’s case was made stronger when it as revealed that during the aforementioned time period, the cryptocurrency was affected by a maximum loss of approximately 5 percent, while the S&P 500 suffered a loss of 6 percent last year alone.

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