Bitcoin Forum

 People say "Don’t invest in Bitcoin, it is too volatile!" but is this saying true?
I will quote you some parts of this article in which the volatility of Bitcoin was compared with some stocks.

 Source ---> https://ecoinometrics.substack.com/p/ecoinometrics-bitcoin-is-too-volatile?s=r

Before start lets define:

 - A drawdown is the correction period that happens between two consecutive all-time high.
 - The size of a drawdown is the distance in percentage between the all-time high and the lowest point of the correction.
 - The duration of a drawdown is the number of days it took for the asset to make a new all-time high.















Source and Readmore ----> https://ecoinometrics.substack.com/p/ecoinometrics-bitcoin-is-too-volatile?s=r

The difference that makes it so it can't really be compared:

- Companies quoted have an established potential and tracking records.
- Bitcoin is still in a 'skeptical' phase. So the risk is considered higher (and it's true) because people are not yet convinced
- The volatility of a share company provides lesser risks than the volatility of a virtual currency (not highly adopted, not really framed) that people still see as a UFO coming from nowhere.

Don't get me wrong, there is no harm in investing in a volatile market but it's all about splitting your portfolio. A  wise way to do it is for example to split:

- 15% of your funds in a store of value
- 15% in the real estate
- 50% in a market considered with a medium risk
- 20% in a high-risk market (either because it can be too volatile, the market is 'not so sure', etc)

I'm not giving a strict percentage to follow but it's just to show how people should balance the risk/profit ratio. If I have only $1000 left and want to invest I would rather invest the amount in a company like Amazon rather than in a cryptocurrency.

Based on the graphs I think it looks more volatile than all but tesla but I don't think there's much in it (except when compared with Netflix maybe - it did have higher drawdowns for shorter periods and a mean curve through it would make it look quite a bit higher in volatility).

I think volatile should've become speculative at some point. The warnings of it having high volatility persisted from the 2013-2015 period imo as it was still new - any investor who mentions it's highly volatile now is suffering from not realising markets are dynamic and adaptive (much like the economy).

Op is making a good point that Bitcoin is not that volatile compared to some major, highly reputable stocks. I think that volatility is actually more of a struggle when it comes to viewing Bitcoin as money rather than as an investment. After all, most people aren't stock investors, and nobody's paying for groceries with Netflix or Tesla stocks. And if Bitcoin is money, it's compared with fiat which, while constantly losing value, normally does it as a very stable rate which is well below what can happen to Bitcoin in a matter of a year. Also, in terms of Bitcoin as an investment, I think LeGaulois  is right that reputation matters to many, and all those companies have big names and many contracts behind them, whereas Bitcoin does not.

The difference is that these companies' stocks dropped A LOT mostly because of fundamental reasons — they're been performing like crap in paper(may it be because of net income/revenues/etc). Whereas bitcoin is far more market inefficient and retail "investor" infested, which can be either a good thing or a bad thing depending on how you look at it.

The important point for me is how it was pointed out that bitcoin's volatility is reducing which is evident in the market. Bitcoin was significantly more volatile years ago than it is now, and would most likely be less volatile years from now.

If people don't want to invest in Bitcoin cause they believe it is too volatile, then they can. Doesn't matter if it's not as volatile when compared to some other stocks or there's a general bias. People should make decisions based on what they believe of the market, with the information available to them.

Interesting charts, but some people will also probably point fingers to historical charts, showing that in the previous cycle it has dropped from almost 20k to some 3k.
And we're in the middle of a cycle, it still can go lower, although I hope it won't. Everything seems to look better for now than in the previous cycle, but I'd still wait until the halving to make sure we're good.
Then we'll see for sure if you've made an unfair comparison ;D or the things finally start looking better for Bitcoin than for stocks even for short term (for 4 years they're looking great anyway).
Of course, we all know that overall volatility keeps decreasing, we all know (I hope) that we are heading towards that (smaller volatility than stocks), still, I didn't know we're so close (or even winning already).

Yea, this. While bitcoin is great and is a good investment(at least in my opinion, obviously), it's not some magical thing that is sole path to riches. Anyone could easily heavily outperform a typical bitcoin hodler by creating a decent business with great cashflow. Or heck, even with just being good at stocks.

Don't listen to people, they know nothing. If they were right, then there wouldn't be such tragic wealth equality in the world, keep in mind that the top 1% owns more than 1/3 of the world's wealth.

People have been saying don't invest in bitcoin since I remember, you could hear that from the very beginning, people were saying that when the price was $1, $100, $1000, $10,000 and they are saying that today too. What's volatile? The fact that the price of bitcoin went from $1 to $68 000? Where do these people suggest investing? In real estate? In gold? In stocks? To make riches richer? Just where? Cryptocurrencies gave poor people opportunities never seen before.


See this picture, bitcoin is volatile but why do you care about day traders when you are a long-term investor? If you are a day trader, then I assume you don't analyze the risks.
https://i.imgur.com/7p3r9D5.jpg

Bitcoin is a relatively new investment asset, probably not worth it when compared to some big company stocks based on most people's sentiments. I'm not too sure I will enjoy higher volatility in the future especially if adoption becomes more and more as adoption will only push bitcoin volatility lower.

We cannot expect things to remain unchanged over time as there is always hope for bitcoin to be better in the future compared to the stock asset being compared especially regarding its volatility. This will only give the impression that bitcoin has a good place among investors who believe that it is not too bad to consider in their portfolio.

A case could be made for bitcoin's volatility decreasing.

While there were massive fluctuations in btc price in past years when forks were announced. When other news headlines hit. These price fluctuations appear to be shrinking over time.

Bitcoin's long term chart could more closely resemble gold, silver and precious metals. Than bitcoin's early era when it was a less known asset, and people weren't certain how it would respond to different market conditions.

This is a big question we all need to look into so we can get more clearer view o what we meant by volatile and how we can consider what financial asset is volatile and those ones that are less volatile. Volatility is the rate of fluctuate of price during a certain period of time. The time that price takes to move from one point to another is the volatility.

We can say;

Volatility=price fluctuation/time interval


Example: If Bitcoin falls at a price of 69k to 38k and lasted for 180 days before it retain the previous high, what's the average volatility of Bitcoin?

Price fluctuation= Previous Height/ higher high - Currently low/Lower low
Price Fluctuation=69K - 38K = 31k
Time interval= 180
Price fluctuation= 31,000/180
                              =172
So, it means Bitcoin had fluctuated at an average time of 172 times before it attained a new height.

---

So how can we compare if Bitcoin is more volatile than other financial assets like Facebook, Apple, Netflix etc because many new or less knowledgeable investors do complain that Bitcoin is very volatile which is the reason why they don't consider it a perfect investment. Does it mean that other assets are not volatile too?

This image really shows the difference between Bitcoin and other assets' volatility and it almost looks similar. To calculate volatility, then one need to look at two factors;
How deep the drawdown goes.
How long it lasted.
These two factors are very important in checking the volatility of a financial instrument.

There is no doubt that this is true, we all know it and it is a fact from which we cannot escape. But on the other hand, stocks are also volatile and serious investors like the old master Buffett lose several billion dollars in just one night, which is not strange.

In the context of Bitcoin vs. stocks, we need to consider that the average investor understands investing in gold or stocks much better than something like Bitcoin. When we look at all the famous world faces who have a negative or restrained attitude towards Bitcoin, then it is quite clear that their opinion is largely reflected in the general population.

If we add that investing in stocks is relatively simple, all you need is a broker and money - while for Bitcoin you still need to understand some things, which is a big obstacle for many. The argument that Bitcoin is volatile stands, but that's not why people prefer stocks, gold, or real estate - the excuse is in the end just an excuse, and in this case a very bad excuse that stems from ignorance, fear, and the influence of the mainstream media.

Volatility are more high for Bitcoin because this market works 24/7 compare to the stock market which is usually close during weekend. There's no huge difference honestly, those stocks companies are also volatile and actually they are more prone to manipulation which I think is more risky compare to its volatility. If you're into Bitcoin that's a good decision, but of course diversification is also a good strategy, those big companies mentioned in OP are one of the stocks to buy right now, just consider its stock price before buying.

It’s like comparing Centralised Vs. decentralised assets. Pretty much obvious from the graph how liquidity is getting affected for bitcoin due to its free nature. There is no guarantee how much liquidity will be available in the pool for today and tomorrow. If checked correctly the calculation could go down to volumes traded at any given hour. It’s constantly changing. However in centralised nature most of the companies shares and stocks are secured by investor relations and companies board of directors. So many things goes into these two type of assets and that’s how they behave on those graphs.

Let's be honest..... the last 200 days was actually very boring with the Bitcoin price volatility. I think the issue come in prior to this period, when we saw huge drops in the price from the all-time-high in the $60k range.  ::)

When Bitcoin's price behave like any other Commodity, nobody says anything.... but the moment when there are huge corrections... people bring out the pitchforks.  ::) 

I think what we can say is that the price corrections are becoming less extreme now, because speculators in the markets has become used to Bitcoin's price fluctuations and they are not dumping every time when there are a 10% drop in the price.  ;)

Why is Bitcoin compared to stocks? Bitcoin is a currency, not a stock. Do a comparison against currencies, and you will see just how volatile it is.

And this short-term volatility is a huge problem for practical uses of Bitcoin. Merchants would have to constantly update prices in Bitcoin, they would have risks of sustaining losses due to volatility - receiving BTC while its high and then having to spend it while it's low. And this doesn't affect only merchants, it affects anyone who receives Bitcoin, including workers who get salaries or governments that collect taxes. And the usual argument to "just HODL" doesn't work here, because there's a lot of situations when payments must happen here and now.

Probably in stocks they are playing by the books and while in Bitcoin, its pure speculation and of course a hype or a fud affects the price of Bitcoin. This may not be a good comparison but as we can see on the trend, the whole market is indeed on a down trend right now, maybe because of the global crisis that is on-going on many countries, the volatility are also based on the economic situation. Bitcoin is too volatile but it doesn’t mean stocks are more safer, you still need to analyze.

There's no big difference with regards to its volatility, stocks most of the time are less volatile, they are just moving if there's a big updates or big news about the economy that could affect their industry. I think its better to compare here the FOREX vs Bitcoin because that's a currency and you can really see real volatility there. You can take advantage of this volatility if you have a good strategy that can work with that trend, just stay focus.

Reason why these large cap companies are getting these nasty 20-30% dumps in a single day is due to a higher than normal volatility which results in lower liquidity.

Generally when VIX index is high, it means lots of volatility, and in return it has less liquidity. Coupled with the fact that many people mostly retail bought all these stocks on leverage, it caused a cascading liquidation event, similar to crypto.

Another reason is they were overvalued to begin with. Their PE ratio was very high and this is not surprising. A few more weeks and it’s a good area to long.

The comparison between Bitcoin and different stocks has been done multiple times before and I don't like it.
Bitcoin isn't a corporation,it doesn't make profits or losses,it doesn't have revenue and costs.
Really interesting infographic,but I couldn't care less about this info.
Also,I think that Netflix is a dying business.They've increased their prices(in times of high inflation and an upcoming recession),but the quality of the content,that's being broadcasted on Netflix is dropping.
Nobody is saying that stocks aren't volatile.It depends of the financial model of the particular company.
Many big companies have stocks with a stable price and low volatility.Why don't you compare them with Bitcoin?

We are seeing the economy in crisis and many economic sectors have been and are starting to show signs of decline. We can see the dominance of the dollar being gradually lost as the economies of Russia, China, and India are rising. Not only the crypto market but also many fields such as securities and real estate are falling into this crisis.
Honestly, I myself have viewed the future of the market positively, but that is not all, as I myself have missed a lot of opportunities and wasted money on mistakes. Individuals who have lost psychological control are almost completely subject to market control. Opportunities come and go, they don't stay forever for us to seize, so we don't need too much to be navigated by the crowd. There will be winners who prove themselves, stay out of the way, and always find a lot of opportunities to make money, but the few who do so and benefit the rest will almost always be dominated by problems related to knowledge, psychology, or luck,...

This would only apply to those merchants who receive direct payments in BTC, and we know very well that almost all of them use payment processors that serve as intermediaries, so merchants have no risk because they receive fiat in their bank accounts. Price conversion is already automatic when it comes to online sales, and it makes sense to point out a price in BTC in a physical store only if it is then displayed in digital form and automatically updated.


That is why people do not prefer to be paid in Bitcoin, and those who use such an opportunity do so because of long-term investment and that part of the salary is mostly a small percentage (5-10%).

*Whew*  That's a lot of neat statistics, OP.  

One thing that popped into my head is that bitcoin has been declared dead a number of times in the past because it, and more importantly, crypto in general, is a relatively new thing.  Netflix might not be that old of a company, but the stock market itself isn't.  In addition to that, Netflix is a business whose fundamentals can be analyzed and its prospects of survival predicted to some extent.  With bitcoin, it's a complete crapshoot since the price depends solely on demand and not on profitability.

I'd also say that Netflix tracks the tech stock sector to some extent, so those wild swings it's had were probably experienced by some other speculative stocks as well (though I haven't checked; I'm just making an assumption).

Finally, who the fuck cares what these pundits declare about bitcoin's viability?  People listen to hype unfortunately, so there are always going to be idiots trying to make a name for themselves by meeting that demand for hype, inflammatory statements, and outrageous predictions.  Just look at Jim Cramer, Robert Kiyosaki, Peter Schiff, and all of those other talking heads who made tons of money early on in their life and now have a flock of sheep making trades based on whatever they're hyping up or hammering down.  It's unreal.

You know, you might be right about that--and to think that they were so hot back in 2011 or so, when they had their DVD-by-mail business thriving.  Now I look at what they have on their site and I can't believe people subscribe to see any of their offerings.  You used to be able to watch pretty much any movie from any era (on DVD).  Now a lot of other companies have jumped on the streaming video bandwagon and provided Netflix with so much competition that they could indeed become irrelevant.

The comparison is due to the transformation of the original good idea of ​​a decentralized end-currency into a regular asset that can be earned on due to its volatility. Interest is fueled by a stamped pile of various altcoins. I don't think we can get away from the current model.

I keep saying that bitcoin is greatly undervalued and its market price has nothing to do with its real value. People can offer 1k usd for btc at a given day, but it doesn't mean you have to sell it for that price.

This is the paradox and a question to all of you who hold bitcoin. What is the real value? What is the fair price?
When the market crashed to 4k USD in March 2020, was that the real value? If not then what was it?
Right now 35k for BTC seems really low. I wouldn't sell my coins for that price. Makes me wonder what's going to happen when we go below, because I'm going to be stuck here forever if people decide its not the fair value. I'll say we have to agree to disagree and keep holding :P

Bitcoin is very volatile compared to anything, the price goes up and down like a roller coaster so it is suitable for short-term or long-term investment, this is what allows anyone to buy bitcoin and have the opportunity to profit and it is never too late if we invest in bitcoin because even though at this time the price of bitcoin is expensive, but if you are patient then we will have a chance.

Bitcoin is a full decentralized asset so it is very fluctuating, even a few years ago when I knew Bitcoin I was very surprised because I had increased more than 20% a day, and made me very enthusiastic to continue to buy bitcoin, but we had to be realistic in Bitcoin investment because Many things can happen like the bearish market that has occurred for almost 6 months since November 2021.

Many of us realize and appreciate that there is much more going on in determining BTC price than merely what happens to be its fair price, and for sure, in recent years, there are some challenges in regards to both increased financialization of bitcoin, but also various kinds of financial instruments that are used to gain exposure to bitcoin's price while never touching bitcoin, and also likely to be used to manipulate bitcoin's price down to way below fair value - so there can be some challenges in attempting to defend BTC's fair value - and surely some needs to attempt to account for the various players who seem to be playing with fire when they either do not have any BTC but they are pushing the BTC price down, or they do not have the BTC that they claim to have - so there could be some difficulties in settling some of the claims (even if they are settled in dollars rather than in BTC) when the BTC may well have moved exponentially higher and against those who had been either claiming to have BTC or claiming to have some other way to protect themselves from UPside BTC price moves - if they end up happening in such a way that claims cannot be covered.


Depending on if you have already built an investment portfolio or if you ONLY have cashflow may well affect how you may accumulate BTC.

For sure, people consider bitcoin's volatility (and likely ongoing inevitable volatility) to be a possible risk to investing, but likely instead if the fundamentals are analyzed and appreciated for what they are, then the volatility may well just be something that you attempt to account for by how you invest or even the amount that you invest, yet most of the time the question of whether to invest should not result in the negative, even though the vast majority of people have come to that conclusion, and so they will more likely end  up having to come into bitcoin at higher prices rather than lower prices, as long as they are not getting in within the next 4 years, and it will take a lot of people more than 4 years before they actually get into bitcoin.

So when in the BTC accumulation phases, the balancing would be between DCA, lump sum investing and buying on dips...to accumulate and maybe if there is a fear that you do not have enough money, then you would pick a lower amount, and invest over time, even though likely more aggressive forms of investing will pay off more in the long run - even though not so clear that they are going to perform well in the shorter-term.

Nothing wrong with comparing bitcoin to companies, even though each of us should appreciate that bitcoin has some hybrid attributions in the way that it has been designed, so even if it may well have short term correlations with various stocks and be comparable in that regard, ultimately, bitcoin is a new asset, a paradigm shifting asset that provides features that had never been previously available and is also in the process of facilitating the largest wealth transfer ever seen, so of course, there are going to be battles and volatility along the way that likely will last many more years.. at least 20 years but probably way more than that.. 50 years or more of ongoing volatility while at the same time increasing adoption and continued value flows into it.

In any event it remains valuable to attempt to keep your eyes on the prize in regards to what bitcoin is even if sometimes some short term comparisons can be made with some of the various stocks and/or company performances.. people also get distracted in terms of considering various shitcoins too.. at least in regards to maybe not appreciating various differentiating aspects of bitcoin and within the crypto space bitcoin is more of a leader with the various shitcoins copying or trying to show differentiation while at the same time benefiting from bitcoin as a leader and the security cover that bitcoin provides.  When comparing the various products/services provided by companies they may be gaining value by not even having any connection with bitcoin, even though it is likely that many of their products/services are going to more directly account for bitcoin too in the coming years whether they are using various aspects of bitcoin or holding bitcoin in their treasuries or even diverting into the engagement of various bitcoin products/services. 

Guys, don't compare stocks with cryptos. The movement in stocks are mostly fueled by the hard facts whereas we have to speculate the reason for crypto's movement. They are not same.

For example Netflix, Their share price depends on the revenue, new addition of subscribers, loss of subscribers and growth percentage. If you want to speculate on Netflix stock, you can look forward for these data points.

For crypto, we never certainly know (in most cases) what is the reason if bitcoin's price suddenly crashes. Bitcoin market is a truly free and global market which is very very difficult to speculate based on some specific parameters. So both stocks and crypto are volatile, but let's not compare them!

Futures are the scourge of crypto, just like altcoins that are trying to gain exposure and legitimacy by pretending to have BTC backing. We could really use a spot ETF.

I feel like we should compare things. How are we otherwise going to be able to tell if they are similar or not? We can't deny that many traders trade both stocks and cryptos.

With Netflix it was about competition and the end of the pandemic. They also started slacking a bit and you could get better movies on Prime for a fraction of the money.

I feel like when Bitcoin crashes it's either right after a peak, like it did in the middle of last year and it coincided with Musk selling and some other things, or it's a bigger picture like stocks crashing, a global recession, pandemic and similar. A good example of such crash is 2020 when price managed to recover fast because the problem was not with Bitcoin, but came from fear of the unknown.
Personally I feel like we've already witnessed the peak selloff twice (May and December 2021) This last drop is more like the 2020 crash.

First off.. .Fix your terms and then reconsider if you are going to say the same thing... .

We are not referring to crypto in this thread..  This thread is about bitcoin.

If we were referring to such an ambiguous term as "crypto" then you might be correct, but it seems that you are throwing out such an ambiguous term, but you are really talking about bitcoin.. Is that true?  Are you talking about bitcoin, or are you mashing up ideas into a kind of gobbledy-gook quasi-incoherence?

Maybe you need to rethink your response to decide if it would be the same if you were to use the word bitcoin whereever you threw out that vague term about crypto because I have almost no fucking clue about what you are talking about if you use the term "crypto" unless you put it within a kind of understandable context.. but at least if you were focusing on using the term bitcoin in your response, then maybe there might be some ability to grasp what your criticisms might be in regards to making comparisons between bitcoin and various stocks.. if they can be fairly compared or not... and I cannot really disagree with you about certain kinds of tensions that surely exists in attempting to make such comparisons, but still does not necessarily mean that such comparison discussions should not be attempted to put in a proper context (if that might be possible in some circumstances and might be misleading in other circumstances, too.. just as you seem to be suggesting).



Maybe you are just saying that they have different parameters?  For sure, there are going to be quite a few inaccuracies to attempt to compare something like netflix to bitcoin, so really cannot disagree with you there - but you come off as not knowing anything if you believe that bitcoin does not have any kind of way to measure it... including but not limited to the seven network effects (https://casebitcoin.com/the-seven-network-effects-of-bitcoin), and speculation is only one out of 7 of the network effects that are continuing to build and expand in bitcoin and surely not easy to account for all of the possible variables within the seven network effects... bitcoin's s-curve exponential adoption involves both the network effects and Metcalfe principles that surely would be considerations that might not apply so well when we might be considering various companies such as Netflix or maybe any of the other companies listed in OP.. because surely bitcoin is a protocol rather than a company.. so it really does not have competitors in the sense that it does not seem too likely that any of the various shitcoins would be able to displace bitcoin as the protocol upon which the other shitcoins are building rather than really providing any significant or meaningful displacement threat to bitcoin.


Surely there is a bit of a need to zoom out when attempting to appreciate bitcoin's longer term price moves because surely in the short term, there can be all kinds of factors that may or may not affect bitcoin's price and may well not be as much as is being claimed.. because there underlying fundamental factors that are captured by 1) stock to flow, 2) four-year fractal and 3) s-curve exponential adoption based on network effects and Metcalfe principles - and yeah, there might be lessening acceptance regarding how much the PlanB stock to flow model and the four year fractal are helping to explain where we are at, how we got here and were we might be going - so there can be some shorter term pressures that push bitcoin's current price performance outside of where we might expect it to be within those broader frameworks, and we might even lose confidence regarding whether the expectations of the various BTC price prediction models might either be wrong or merely need to be shifted in their curves after viewing them with further passage of time...

In other words, for sure, in the short term BTC prices can be manipulated outside expectations, but we still may well wonder whether the BTC prices will bounce back or if the whole model might be broken.

Bitcoin and crypto will continue to be volatile, there are always surprises from whales or speculators who want to dumps or pumps, it's different if we look at other commodities such as gold which is very difficult to speculate because gold's market cap is very large, I'm sure if bitcoin's market cap is 1000x from now then will not be too volatile.

Pretty interesting comparison with unexpected results even though we can't actually compare the growth of a company with bitcoin's growth still it can be showed to people who are giving criticism about bitcoin all the time and Mark it as the most riskier investment to jump in. Bitcoin is too volatile when we look it in the short time frame but when we look at the long term time frame it is the most consistent profitable investment for its holders.

In terms of investment, yes, we should consider the comparison from stocks with crypto as both of them has their own volatility on their prices and it is mostly similar to each other. However, I don't think that bitcoin  should be compared to stocks as unlike with stocks it has usecase which are companies like netflix that provides a streaming platform to its users.
In this case, we can consider other crypto that has usecase and compare them to other stocks as are investing on the companies projects and future roadmaps or updates.