The study “A Closer Look at Bitcoin's Volatility”, published by Fidelity Digital Assets research analyst Zack Wainwright, highlights that Bitcoin's volatility has decreased considerably in recent years.
According to Wainwright, Bitcoin's volatility estimates have been overstated in recent years, as the market-leading cryptocurrency has become less volatile than major S&P 500 stocks and Netflix.
In the report, published last week, the Fidelity research analyst highlights that Bitcoin's volatility is a welcome feature for cryptocurrency investors, but that it has historically been declining to the point that it has become less volatile than many popular mega-cap stocks on the market.
“Bitcoin is currently less volatile than 33 S&P 500 stocks, and as of the end of 2023, there were 92 S&P 500 stocks more volatile than bitcoin,” Wainwright said.
Source: Fidelity Digital Assets
Bitcoin vs Netflix volatility
Compared to Netflix, the analyst also stressed that Bitcoin is now less volatile than NFLX.
The volatility of the American streaming platform's shares, over a 90-day time period, averaged 53%, while that of Bitcoin was 46% for the same period.
Taking into account the results of his report, the Fidelity analyst assures that the volatility of the leading cryptocurrency could continue to decrease, as this market consolidates and gains greater recognition, maturity and stability.
Source: Fidelity Digital Assets
“Unsurprisingly, a young, nascent commodity or asset class with a small market cap is more likely to experience greater volatility as new capital flows into the asset,” Wainwright said.
Bitcoin has matured over the past 15 years
However, the maturity and growth of Bitcoin's market capitalization in recent years has turned the cryptocurrency into a globally recognized asset class, reducing its price volatility, which reached up to 200% in its first years of life.
"In other words, new capital inflows will not move the market or the marginal buyers or sellers that much," the expert commented.
Wainwright noted that investors have been overestimating Bitcoin's volatility and that it has been much lower than even market professionals expect. He concluded that this characteristic has been misunderstood and is still in the discovery stage.
In 2021, JPMorgan published a report noting that Bitcoin's historical volatility had dropped by 86%, while the Bank for International Settlements (BIS) highlighted that this characteristic was one of the main drivers of cryptocurrency adoption. According to the bank, although volatility is synonymous with risk for investors, it is a an attractive property for many, since it is well regarded when it generates positive returns.
