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

[goldade]

You're actually right that the volatility in the price of bitcoin is decreasing and I believe this is good towards bitcoin becoming the number one currency in the world
One of the major setbacks of bitcoin becoming a worldwide currency is because it is not stable. Let's consider this, if I accept bitcoin as a payment option for my business, and I accept a certain amount coin, say 0.5 which let's say is equivalent to 25 thousand dollars only to realize it's less than that after two weeks, I mean no one wants that
If the volatility is drastically reduced and Bitcoin becomes an almost stable coin, it'll become the world's currency

[aioc]

One of the major setbacks of bitcoin becoming a worldwide currency is because it is not stable. Let's consider this, if I accept bitcoin as a payment option for my business, and I accept a certain amount coin, say 0.5 which let's say is equivalent to 25 thousand dollars only to realize it's less than that after two weeks, I mean no one wants that
If the volatility is drastically reduced and Bitcoin becomes an almost stable coin, it'll become the world's currency

You have a good point, this is what actually stopping Bitcoin from getting accepted in major payment portal, companies wants to get real time value of what customers have been paid ,so they can cover the cost of their products and services, if the volatility is greatly reduced although not possible, companies are still OK with 3% less after they received it as long as the price will bounce back, in just a few hours or days.

[oHnK]

One of the major setbacks of bitcoin becoming a worldwide currency is because it is not stable. Let's consider this, if I accept bitcoin as a payment option for my business, and I accept a certain amount coin, say 0.5 which let's say is equivalent to 25 thousand dollars only to realize it's less than that after two weeks, I mean no one wants that
If the volatility is drastically reduced and Bitcoin becomes an almost stable coin, it'll become the world's currency

You have a good point, this is what actually stopping Bitcoin from getting accepted in major payment portal, companies wants to get real time value of what customers have been paid ,so they can cover the cost of their products and services, if the volatility is greatly reduced although not possible, companies are still OK with 3% less after they received it as long as the price will bounce back, in just a few hours or days.

I also saw the same thing, how currency can be accepted around the world if the volatility is very high.  Companies and every individual need a stable currency and how can we make a budget if we use a currency that is so highly volatile.  It would be very difficult for a policy to be made if it was based on a currency like this.  In order to protect the company against price volatility, a hedging strategy was created.  To protect the value that is owned or needed.  Even hedging would be very difficult to use for BTC due to its volatility.

[odolvlobo]

Updated 2021-03-05

[odolvlobo]

Updated 2021-05-24

[PIR]

Its just amazing thing how it was mapped up you can see easily how the volatility of bitcoin every now and then, year after year and you get the idea of comparison how it was happened, or how many times it goes up and down. sometimes its discouraging and disappointing thing to see it too, but then you have to accept the fact that this is really how the bitcoin works.

[fillippone]

Interesting thread.
It would be nice to see an update of that after the last crash.
Implied volatility in the option market increased to very high level.
Just remember implied volatility is a different form of volatility:

• Historical volatility, like the one you computed here, looks at the realised volatility observed in the past.
• Implied volatility is the amount of volatility expected by the market until options expires, fo is a forward looking measure.

Of course they are correlated, but those are really different.

[odolvlobo]

Updated 2021-8-4

[seramania]

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.

Well, this is what I agree with, the larger volume causes the price to look like it doesn't fluctuate. but for the current position it is difficult to see the potential for bitcoin to be 10x. even I am pessimistic about the current condition of bitcoin. looks like a cycle of multiple increases could be coming in the next few years. next 2 or 3 years

[jinneas]

As the price of Bitcoin is rising, the positive spread structure has further expanded, and in the options market, the short-term skew curve has also fallen sharply, indicating that the price outlook is optimistic.
Low volatility indicates that price manipulation is weakening.

With the large-scale adoption and legalization of Bitcoin in some countries, Bitcoin continues to attract more investors, and the price should show an upward trend. The higher the market value, the change in Bitcoin price will gradually weaken, and the volatility will gradually decrease.

[fillippone]

As the price of Bitcoin is rising, the positive spread structure has further expanded, and in the options market, the short-term skew curve has also fallen sharply, indicating that the price outlook is optimistic.
Low volatility indicates that price manipulation is weakening.

With the large-scale adoption and legalization of Bitcoin in some countries, Bitcoin continues to attract more investors, and the price should show an upward trend. The higher the market value, the change in Bitcoin price will gradually weaken, and the volatility will gradually decrease.

Volatility is a symptom of the price discovery mechanism: as the price discovery goes on, the volatility goes down. Guess which trading asset has the lowest volatility? the ones where price discovery is very little: EURUSD, short term government bonds...

[Obito]

Don't let this misled you from the fact that it's still volatile and that you can still lose your investment when you invest badly in bitcoin. It's a good indicator though that we can see the volatility getting tamed but how long do we have to wait before we can't worry anymore about this volatility in prices.

[fillippone]

Don't let this misled you from the fact that it's still volatile and that you can still lose your investment when you invest badly in bitcoin.

That's true for every asset (AAPL, Bonds or whatever you can trade).
There 's no such thing as risk-free investment.

On the other hand, some instruments, like FIAT currencies, are engineered to make you lose money by design, so you HAVE to do something with that money in order not to lose your money.

[jakdanyel]

It may seem like that but I don't think that the volatility will ever be gone or come down to a very low level. Because it is the main feature of cryptocurrencies. Their prices will always continue to fluctuate. Sometimes it will be at a high rate but sometimes at a low rate.

[fillippone]

It may seem like that but I don't think that the volatility will ever be gone or come down to a very low level. Because it is the main feature of cryptocurrencies. Their prices will always continue to fluctuate. Sometimes it will be at a high rate but sometimes at a low rate.

Absolutely not so sure about this.
In the hyperbitcoinisation of the economy, BTC and maybe the first few cryptos will exhibit very low volatility, while maybe the surviving fiat currencies will have higher volatility!

[jaysabi]

Pools that are very large and very liquid generally are not as volatile because of just how much money is required to move the market cap substantially.  An example of this is small cap stocks are generally more volatile than large cap stocks.

I do think the market cap is reaching a size where crazy swings will be on the decline.  It'll be interesting to see what happens as more companies lock up millions of dollars of bitcoin at a time, and whether that increases or decreases volatility though.  Generally, the less of something available the more volatile it is, so locking up bitcoin in company treasuries could possibly increase volatility.

[Kusman]

This is a really interesting fact you indicate. I've seen it for the first time and I must admit that I'm quite surprised. Because the volatility is the main thing of the market. I wouldn't expect it to vanish. So I wonder whether this fall is going to continue. This could mean that the market will change at an incredibly rate.

[Desmong]

I am optimistic that in the future the volatility in the price of a Bitcoin will be even lower, this is because more and more companies are investing
large amounts for long-term investment. Make the Bitcoin price a little more stable, especially with the current price of Bitcoin, the price is very high.
Makes many investors choose to hold Bitcoin, because of that, even though there is a current correction. Prices fell slowly and were less volatile.

Large firms are not really interested in holding Bitcoin cause they know that anything can happen in the market holding at a long run if profits are not gained consistently as the market keep dancing. I think no the same time the market is going to fall, much retracement should be expected making market complex and tedious to analyze. We can't base your claim on the overall market cause that can just be another misconception.

[Bravehash]

Decreasing isn't stability mate, even if the volatility chart goes to the lowest this isn't any where close to stability, all I can see here is massive adoption rate only and that doesn't mean people won't dump when they need money, accept how BTC works and enjoy while doing that

[odolvlobo]

Decreasing isn't stability mate, even if the volatility chart goes to the lowest this isn't any where close to stability, all I can see here is massive adoption rate only and that doesn't mean people won't dump when they need money, accept how BTC works and enjoy while doing that

How do you define stability? Is there a measure of stability that I can track? What is the difference between volatility and stability?