Bitcoin (BTC) has long been considered a volatile asset, but its volatility has declined and will continue to decline as the cryptocurrency matures, Fidelity Digital Assets said in a study on Wednesday. stated in the report.
Analyst Zach Wainwright writes that “new assets typically take time to undergo price discovery, mature, and settle into lower volatility,” adding that when the U.S. abandoned the gold standard in the 1970s, gold He pointed out that even the market showed high volatility.
Bitcoin is already showing signs of maturity in its 15 years of existence, with volatility hitting record lows on an annual scale, the report said.
“There has been a clear downward trend in volatility over the life of Bitcoin, and we believe this trend will continue as Bitcoin continues to mature over time,” Wainwright wrote.
According to Fidelity, using 90-day realized historical volatility numbers, Bitcoin is currently less volatile than 33 of the S&P 500 companies and will be less volatile than 92 stocks in the index as of October 2023. It was said to be low.
Over the past two years, the cryptocurrency has had lower volatility than Netflix (NFLX), and when compared to the Magnificent Seven, a group of high-performing stocks, “Bitcoin's volatility doesn't look like an outlier.” the report points out.
As with all emerging asset classes with small market capitalizations, cryptocurrencies are likely to experience higher volatility due to new capital flows, the note said. “However, as the asset class matures and market capitalization increases, we expect the impact of capital inflows to become smaller as they flow into a larger capital base.”
of approval US physical Bitcoin exchange-traded funds (ETFs) increased significantly in January, and subsequent inflows were expected to dampen the cryptocurrency's volatility. Still, the cryptocurrency has fallen more than 16% in the last month.
“New capital inflows do not move markets or marginal buyers and sellers appreciably,” the report added.
