Source: CryptoSlate
Translated by: Blockchain Knight
Although Bitcoin continues to break historical highs and then quickly corrects, this leading global cryptocurrency is increasingly exhibiting the characteristics of a mature asset class, with its declining volatility being a core signal.
For a long time, Bitcoin has been regarded as one of the most volatile financial assets. Years of dramatic price fluctuations have deterred many investors. But what if I told you that Bitcoin's volatility is now lower than that of blue-chip tech stocks?
According to ecoinometrics data, Bitcoin's current 30-day actual volatility has dropped to its lowest level in nearly five years. Even though Bitcoin has experienced multiple headline-grabbing rises and corrections over the past five years, this trend continues: "This is precisely the behavior expected of a mature asset."
Since 2022, Bitcoin's volatility has often been lower than that of some Wall Street giants, including large-cap stocks like Nvidia. During significant fluctuations in the tech sector from 2023 to 2024, Bitcoin, known for its "extreme volatility," actually showed greater price predictability than Nvidia.
Even in the current round of the Bitcoin bull market, price fluctuations are noticeably milder than in previous cycles. Macro analyst Lyn Alden recently told CryptoSlate that she believes Bitcoin's cycle is changing.
She believes that this cycle may last longer and be more stable than previous ones, entering a consolidation phase after strong upward momentum, "rather than plummeting after a sharp rise."
The decrease in volatility is just one sign of Bitcoin's increasing maturity. The launch of the U.S. Bitcoin spot ETF in early 2024 is a milestone event that opens the door to mainstream investors for this asset.
Large asset management firms like BlackRock and Fidelity offer retail and institutional investors direct access to Bitcoin assets through regulated exchange-traded products. This not only expands the pool of Bitcoin holders and increases liquidity but also dampens significant price fluctuations, further integrating Bitcoin into traditional markets.
In addition, recent regulatory policy adjustments allow Americans to include Bitcoin in their 401(k) retirement accounts. As diversified portfolios gradually allocate Bitcoin, its volatility further decreases.
Pension funds, endowment funds, and insurance companies have also begun to incorporate Bitcoin into alternative asset strategies. The participation of these mature investors increases rational trading and weakens the impact of short-term speculative funds on prices.
During periods of risk appetite and risk aversion, the correlation between Bitcoin prices and the broader stock market has been increasing, which is another signal of its integration into the mainstream and its maturation. While you may question whether this aligns with Bitcoin's original positioning, it indeed reflects the mainstream market's acceptance of it. The determined child will eventually grow into an adult who changes the world, and Bitcoin is undoubtedly undergoing such a transformation.
For both retail and institutional investors, the decrease in Bitcoin's volatility means reduced risk and a smoother investment experience.
This trend also indicates that Bitcoin is moving away from the crazy speculative fluctuations and turmoil of its teenage years, gradually establishing itself as an important component of a legitimate social member and a diversified investment portfolio. It's time to acknowledge that our "child" has grown up.
