How Volatile Is Bitcoin Compared To Other Assets

High volatility creates short-term uncertainty across crypto markets, which can lead to temporary losses, triggering panic selling. For instance, bitcoin's recent crash from a price of more than $65,000 on August 1 down to under $54,000 a week later (a price that is slowly climbing back up ever since) was primarily influenced by fears of a global recession, factors not directly related to bitcoin itself. For businesses, volatility complicates pricing strategies. For consumers, it reduces bitcoin's appeal as a medium of exchange. Regulators worry about the potential destabilization of related markets, even during overall upward trends.

When analyzing annual volatility metrics, how much an asset's price is expected to fluctuate over a year, based on its daily price movements, it becomes clear that bitcoin has more volatility (including more upside potential) than any other asset on the market today. For example, a 20% annual volatility suggests the asset's price might move up or down by about 20% within a year.

Bitcoin'sBitcoin -3.5% average annual volatility over the past 10 years is 46.31%, according to my own analysis using custom Python tools. This significantly surpasses the volatility of all other assets examined. For example, it's 4.8 times higher than the S&P 500 (9.64%), 5.3 times higher than gold (8.68%), and 3.1 times higher than Apple stock (16.60%) over the past decade.

Bitcoin's 10-Year Volatility Far Exceeds Traditional Assets

Traditional financial companies, such as Visa (13.81%) and JPMorgan Chase (14.98%), show about three times less volatility over 10 years than bitcoin.

There are assets where the difference is less pronounced: bitcoin's volatility is 1.4 times higher than Tesla's (32.30%), 1.7 times higher than NVIDIA's (27.67%), and 1.8 times higher than WTI oil (25.66%).

Bitcoin's Volatility Is Declining in 2024

Over the last 12 months, bitcoin's average annual volatility stood at 35.48%. While this still exceeds the volatility of all other assets analyzed, the gap has noticeably narrowed compared to the 10-year period.

Bitcoin remains 4.5 times more volatile than the S&P 500 (7.88%) and four times more volatile than gold (8.92%). This indicates a slight convergence with traditional safe-haven assets, though the difference remains substantial.

Bitcoin Is Now Comparable To Tech Stocks

Over the past year, bitcoin has shown volatility more comparable to other traditional investments, particularly tech stocks. This trend suggests bitcoin's growing integration into a broader range of investment portfolios and its gradual acceptance by investors as a more mainstream risky asset.$BTC