Bitcoin's Volatility Inch Closer to Stability

February has proven to be a triumphant month for Bitcoin. Even the most optimistic investors likely did not anticipate Bitcoin surpassing the $50,000 milestone so swiftly.

Market sentiment remained buoyant, barely flinching ahead of the January CPI report. Comparisons to the 2021 bull run were drawn, fueling a fresh wave of predictions for Bitcoin to reach the $100,000 mark.

Two notable developments underscored this optimism. Firstly, the widespread announcement of the Bitcoin ETF, a gateway for institutional investors, saw it amass $10 billion in total assets under management within just a month of trading. Secondly, the S&P 500, comprising the top 500 technology and financial giants, achieved a historic milestone, reaching 5,000 points. This mirrors investors’ optimistic outlook on financial markets.

Analyzing the actual volatility of Bitcoin in recent years reveals a narrow range and a cautious approach that not only reflects the current environment but also signals progress towards stability, in stark contrast to the intense fluctuations of previous bull cycles.

In 2021, the actual volatility of BTC consistently oscillated above 100% compared to the previous week, nearing its peak at 140%. However, over the past year, this volatility has generally been maintained below 60%.

Ethereum, moving in parallel with BTC, follows similar patterns on a higher scale, with actual volatility reaching nearly 300% in May 2021. Nevertheless, over the past 12 months, it has consistently decreased below the 60% threshold.

There is still work to be done before we can label Bitcoin and Ethereum as assets with moderate volatility when compared to stocks like Apple. However, the actual volatility fluctuating within a moderate range is an optimistic signal indicating the increasing stability of the crypto market.