Bitcoin is more stable than US stocks, data shows
Cryptocurrencies, known for their wild swings, are actually quite stable these days, as Bitcoin hovers at its $20,000 resistance level, making it less volatile than stocks. It’s not necessarily good news.
Important takeaways
- Bitcoin’s volatility has been at a record low, according to BitMEX’s .BVOL index, and is currently at 19.65%.
- Bitcoin trading volume has also fallen in the past month, from $50 billion to $14 billion.
- Bitcoin’s low volatility comes as the US stock market has been particularly volatile, with the VIX index at 30.89.
Bitcoin volatility at historic lows
BitMEX’s .BVOL index, which measures the 30-day historical volatility of Bitcoin against the US dollar, has fallen to 19.65% as of October 18, down from more than 85% in June. Volatility is a measure of how much the price of an asset has moved up or down over time, and the decline shows a measure of stability for the cryptocurrency.
At the same time, Bitcoin’s trading volume has dropped to $14 billion in the past month from $50 billion. Low volume indicates a lack of interest in buying or selling, resulting in less liquidity in the market.
A low level of volatility may be good for bitcoin, but a low level of volatility is not because it indicates that people will withdraw their money from the market and the price may fall further.
The mix comes amid signs that crypto is making more inroads into everyday investments. Just this week, Mastercard entered the industry, following similar moves by Visa and Betterment.
It’s also happening against a backdrop of turbulence for mainstream investors as recessionary headwinds build thanks to accelerating inflation and interest rate hikes.
Bitcoin Stable While Stock Markets Are On A Roller Coaster
While Bitcoin is experiencing record levels of stability, Wall Street is seeing turbulence as inflation, interest rate hikes and other macroeconomic factors affect the corporate world. Shares and indices have fallen, although some gains were made at the start of the week.
The CBOE Volatility Index, popularly known as the VIX, has nearly doubled since the start of the year and now stands at 30.89. The Vix, which tracks volatility through S&P500 index options, typically rises when stocks fall and vice versa, and is now matching its behavior in 2008. Several analysts say more stock market falls are expected in the coming months.
All of this means that the Dow Jones is now more volatile than Bitcoin, according to a recent report from ZeroHedge. This new trend is interesting to watch as Bitcoin’s price correlation with the S&P is high, but volatility does not follow the same path.
The bottom line
Historically, Bitcoin has rallied following a lack of volatility, and investors will want to keep an eye on the market. However, it is also important to note that 2022 busted myths like Bitcoin is a hedge against inflation and it is not affected by fluctuations in the stock market. As crypto becomes more mainstream, new trends and developments are expected in the coming months and years ahead.
