The volatility in the price of a bitcoin is falling over time, or not.

[odolvlobo]

The following chart shows the volatility in the price of a bitcoin since the beginning. Each point shows the coefficient of variation for the year or month surrounding that date.

The coefficient of variation is a measure of volatility. It is the standard deviation relative to the mean.

Previously, I stated that the volatility is falling over time. If you look at long-term graph, that seems to be the case as the price is no longer rising as quickly as it was many years ago.

However, the volatility as measured by the 33-day CoV seems to have actually flattened out. My explanation is that even though adoption has increased tremendously, the use of Bitcoin as a savings device has removed enough liquidity from the market to counter the effects of adoption.


Long term:


Short term:


Edit: Updated as of 2023/9/25

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[Oshosondy]

You are just not wrong about this, the volatility in bitcoin price is truly decreasing, if we can analyse bitcoin in the earlier years of its creation, during the first halving, it was able to move 30x before the second halving while it was able to move 10x before the third halving. Now it is very possible bitcoin will not move 10x till next halving probably in 2024, although I am not sure or certain about this but seem like bitcoin can not increase from $8200 pre-halving price to a price above $80000 before the next halving. If this is affirmed as at then, then bitcoin price volatility is decreasing to make this recent price also continuing to be more valid.

[bassbity]

I agree, bitcoin price volatility from year to year seems to have the same pattern. where if you have experienced the halving, the decrease will occur significantly.
but we also need to pay attention to how from year to year the supply of bitcoin will be increasingly scarce and scarce. This shows that even though the price of bitcoin has decreased, the potential for increase in the years will decrease and cannot be prevented any longer.

[hatshepsut93]

I saw similar charts a few years ago, and a lot of people back then tried to argue that volatility isn't going down and that it's actually increasing, but now it's even more clear that it's not true, and of course it makes sense that as we get more volume, and the novelty factor disappears, the volatility is bound to go down. Even if this bull market will make volatility increase, this volatility won't be as big as that of the previous cycles, so the trend is correct.

But it seems like if you extrapolate the line, the volaility will long-term stabilize at some level, like 10-15%, which also makes sense, because there's no price stabilizers like with fiat currency.

[masterzino]

Still, the volatility is pretty high and could deliver some very unpleasant position closures.

Another problem is liquidity. I saw multiple times spikes (for a second or so) to close to zero or the moon. While these spikes don't affect the price in general, they are responsible for a lot of wiped positions. This cannot be seen in Forex/Stocks.

[fiulpro]

The thing is , if we have more stable investors over the years the Volatility will fall , since there will be a backup this this chart clearly shows that over the years , bitcoins as a whole have essentially succeeded in gaining more stable holders and investors which does mean that it's more trustable, more stable , more efficient, would even attract some of the conservative investors.
I have even seen news calling bitcoins the *crypto gold*, the *digital gold* things like these are more essentially important now since with a less Volatile currency one can have many more positive points like:
1. It will be more acceptable by the government
2. It would create a stable investment atmosphere
3. Can be considered for a long term investment like : retirement funds etc
That is a good news 😸

[Ryker1]

Well, as the mass adoption and legalization in different countries of bitcoin is perhaps being fulfilled then gradually the volatility would really subside and changes in the price may be little and might take a longer time before another movement will strike. The volatility that we are experiencing from the past is only due to the investors who keep on making movements on their bitcoin either selling it because of the needs or trust concern with bitcoin. Moreover, -- I am pretty sure that in the succeeding year's volatility will diminish or will be moderate as the chart provided by OP has already proved that it keeps on reducing from the first few years of bitcoin up to the present.

[Princejebs]

At first, many thought it was a ponzi scheme where they can double their money, so most of the time, you see bitcoin get pump and dump by some whales who trap traders into thinking we going to the moon but reverse is always the case. Now adoption is growing, pump happens with little dump( correction ) which is normal in every market.
The way at which institutional investors are accumulating this digital coin is huge, Bitcoin growth wouldn't be exponential like the past.

[Fortify]

It's quite interesting to see it mapped out, but it makes sense for a combination of reasons. It looks like large money managers have been consolidating large amounts over time with no plans to sell, there is a larger pool of individual asset holders who have weathered past volatility and it has weeded out people who will not hold on to it long term. Also with the price creeping up it has probably lost a little bit of appeal to some people who think there is little room left to make a profit from speculating.

[Twentyonepaylots]

Part of this is from the adoption of more companies which greatly funded and stabilized the coin. It wouldn't be a surprise especially when thousands and thousands of bitcoins are being mined or bought by large-scale companies themselves. Now the real problem is here, are we ready for bitcoin to become a bonafide currency? It being stable rules out the possibility for profits, so are we ready to lose money for our vision?

At first, many thought it was a ponzi scheme where they can double their money, so most of the time, you see bitcoin get pump and dump by some whales who trap traders into thinking we going to the moon but reverse is always the case. Now adoption is growing, pump happens with little dump( correction ) which is normal in every market.
The way at which institutional investors are accumulating this digital coin is huge, Bitcoin growth wouldn't be exponential like the past.

So the profit wouldn't be as big as they are back in the days, and if this trend is followed, we may not even get any profits at all in the future years to come. So much for the "US dollar will fall tp the superior bitcoin" I guess.

[Hydrogen]

In previous years, bitcoin was an emerging and new technology. An unknown quantity. Trading it was not unlike sailing in uncharted waters. This market uncertainty led to high volatility and exaggerated price moves as investors treated many events as worst scenarios. Due to there being no prior historical precedent upon which to accurately quantify what price corrections were appropriate for x, y, z scenarios. It should naturally follow volatility will shrink as time passes and bitcoin becomes a more quantified and known asset. With a better defined history.

[Poker Player]

It seems logical. The higher the market cap, the lower the volatility, because it takes a lot more money to vary the price. And in the future there will be even less volatility, as the price increases.

[Lorence.xD]

The thing is , if we have more stable investors over the years the Volatility will fall , since there will be a backup this this chart clearly shows that over the years , bitcoins as a whole have essentially succeeded in gaining more stable holders and investors which does mean that it's more trustable, more stable , more efficient, would even attract some of the conservative investors.
I have even seen news calling bitcoins the *crypto gold*, the *digital gold* things like these are more essentially important now since with a less Volatile currency one can have many more positive points like:
1. It will be more acceptable by the government
2. It would create a stable investment atmosphere
3. Can be considered for a long term investment like : retirement funds etc
That is a good news 😸

The problem with stable investors is they buy a lot of bitcoin on the market leaving only a few for individual investors. I do not know if it is a bad thing but having a lot of corporations and big wigs in the game, the more the definition of decentralized becomes muddled which is something that we should be wary and alert. Although, I sound negative there, I see this chart as a positive for bitcoin in the long game, I can't deny the effects listed in the quote above because I advocate those too.

[davis196]

This theory has been proven before.The crypto market is way bigger now,compared with 2011-2015,so the price looks less volatile.In a big market,there would be way more funds required to move the price in a certain direction.The crypto whales and early adopters aren't as powerful as they used to be.The same thing applies to crypto exchange platforms,however,they still could still influence the prices.
Nowadays,everybody in the crypto world is expecting the institutional investors to come and pump the crypto prices by 10x,which is kinda funny. Bitcoin will never go from 18K to 180K in one week or month.I think that the BTC price might never again increase 10 times.

[Ayiranorea]

The market is quite volatile. What will be the next move in the market. The volatility of the market in comparison to the past has decreased much, as there is huge progress in the adoption of bitcoin in the global market. The market which is found above $19000 by the week starting has now come to a price below $18000. What'll be the next move.

[ray_saeed]

Bitcoin may become less interesting without volatility

[Ucy]

Ofcourse!

I think if demand/supply starts stabilizing, the extreme volatility would be reducing and much more moderate, but should have alittle bit balanced waves that occasionally move upward than downward for the sake of its deflationary feature... that should keep things moderately deflationary.    I prefer though to have the price somewhat regulated in a way that prevents those extreme volatility from happening often.

I don't think it would be inflationary like fiat long-term if it remains scarce or continue  to reduce in supply.

[Wind_FURY]

I believe OP's lesson is, if you want to "buy the dip and HODL", confirm your bids nearer, not farther from the current price, or else you'll miss it.

[kpierce77]

The market is quite volatile. What will be the next move in the market. The volatility of the market in comparison to the past has decreased much, as there is huge progress in the adoption of bitcoin in the global market. The market which is found above $19000 by the week starting has now come to a price below $18000. What'll be the next move.

This shows that there is increasing trust among the public about how crypto is. We can also see that bitcoin is currently having a great momentum where the current bulls are quite good compared to 2 years ago, and I think we will be able to see a new ATH if this continues and also many large institutions are following

[Mauser]

One more thing regarding the volatility of Bitcoin's. The higher the prices the higher in USD terms can be to show as volatility. A bitcoin price of 20,000 USD is not that much impacted of a 1,000 USD drop as a bitcoin price of 10,000 USD. And another feature we see right now is that more and more investors join the market. Once the market drops we would see a lot of opportunity buyers buying the coins.