Central bankers criticize Bitcoin for its excessive volatility. Other players in mainstream finance are pinning the crypto asset for this suspected weakness. Yet the volatility is no longer that of 2017.
With Bitcoin, prepare to lose all of your money. This is in substance the message of the past few weeks among several central banks, including Christine Lagarde of the ECB. Regulators are thus warning investors.
BTC would thus have against it, in particular to offer a real alternative to gold, its too high volatility. Indeed, changes in the price of the asset can fluctuate greatly in the space of just a day.
Bitcoin’s fluctuations are easing
Should Bitcoin therefore be disqualified in the name of this alleged excessive volatility? The conclusion would be a bit quick. Bloomberg notes that these variations, if they remain real, are however less than in the past.
” For example, on a rolling 60-day basis, Bitcoin’s fluctuations are generally lower today than when Bitcoin peaked in 2017. », Assess our colleagues. And this trend is also contributing to the rise in prices in recent months.
For observers, the democratization of Bitcoin as an asset class should also help stabilize it. Likewise, the growing participation of institutional investors is also contributing to this.
“Tesla’s allocations are a key iteration of the spread of Bitcoin, which will push volatility towards that of gold and potentially, ultimately, below,” said Mike McGlone of Bloomberg Intelligence.
BTC volatility comparable to that of stocks
The cryptoasset, however, still has some way to go. And Bloomberg reports that its current level of volatility is more akin to volatile stocks like Tesla rather than gold. But this volatility is much less over the years.
Bitcoin’s average annual change is 69%, compared to 27% for silver, 13% for gold and around 20% for stocks, according to bank strategy director Morgan Stanley.
However, this indicator is far from being fixed, unlike precious metals. ” Since Bitcoin’s launch, its volatility has decreased from an annual average of over 400% », Emphasizes Ruchir Sharma.
So, ” The volatility gap between Bitcoin and traditional hedges is narrowing. The expert believes that Bitcoin’s risk-adjusted returns are now in the same range as global or US equities.