Bitcoin's volatility doesn't make it a bad store of value.

[red4slash]

Its very common that you can see some sort of people thinking that bitcoin isn't a good store of value because of it volatility, but they would have forgotten to realized the advantages that comes on with this as well, we don't lose from the part of the investment we are making in bitcoin when it becomes more volatile and dumps, we also make profits as much as possible the moment the market begins to pump through this same volatility, now the question lies on how people or bitcoin investors were able to withstand holding.

Such things are inevitable because everyone is free to express their opinions and speculations, especially not everyone trusts bitcoin as a good investment for now so it is quite natural that there will still be a lot of people who think that bitcoin is not a good store of value because of its current volatility.

But on the other hand it also depends on them because in the end being in bitcoin is also not without coercion and when they don't want to face risks then why be forced to be in bitcoin and it is also not recommended to be here because this is not a game that does it by trial and error.
We must be aware when talking about bitcoin then indirectly this will relate to the money we have so you have to be serious in doing it. and for those who are not sure about bitcoin because of its volatility it does not need to be debated because everyone has their own views on this.

[South Park]

It's barely certain for most people about bitcoin being a nice store of value. Because they're sidetracked by its volatile nature, many, still, wouldn't trust saving money through bitcoin. In his book Skin in the game Nassim Taleb said; “Volatile things are not necessarily risky, and the reverse is also true.” Coupled with the viral term Bitcoin is risky due to its volatile nature, lots of potential investors don't risk taking this precious savings opportunity. Over this period of years, time has proven that bitcoin's volatility doesn't make it a risky store of value. Paying attention to the reverse of Nassim's statement, let's make dollar an example; Dollar is not volatile, but, it's a bad store of value, inflation affects dollar's value over the years.

Bitcoin's volatility is only effective for short term players same as dollar's stability. Ultimately bitcoin remains a better store of value than dollar despite being a volatile asset.

Share your insight.

My idea was taken from this article: https://unchained.com/blog/bitcoin-is-not-too-volatile/

We have known this for a long time, it is just that people hate the volatility even if it plays on their favor, this is why many people still prefer to keep their savings on fiat currencies despite the fact that governments steal from them every single time they print more currency, however as inflation becomes more of a problem, I expect more people to wake up and recognize the truth, which in turn could push the price up and it could help bitcoin to reach a new ATH.

[Casdinyard]

Who said it wasn't a good store of value? Where else can you find an asset that would turn your asset 10000x in a span of 10 years, 5000x in less than 3 years?

I reckon that the only ones who think bitcoin's a bad store of value are those who don't see the point of investing in bitcoin in the first place are those who lost horribly due to poor financial decisions a few years ago lol. Bitcoin's not a quick cash grab that you can buy now and expect to pump tomorrow, you have to have the patience of the fucking Buddha to earn millions in this shit but for the most part it only ever requires you to really hold your money until such a time. It doesn't ask you to do anything else.

Bitcoin's one of the best stores of value out there if you know how stores of value work in the first place. Anyone can buy bitcoin and gold or any other store of value out there for that matter, but the ones who win massively in this rendezvous are those who know their shit, those who know how to wait, and those that don't get easily swayed by FUD.

[serjent05]

One of the factor that determine the value is its interest rate, Bitcoin albeit highly volatile has given tens of thousands of interest for its holders.  A good store of value is stated to be stable or increase its value over time.  Bitcoin might fail for its price stability but it excels in increasing its value over time.  But one thing that people are confused about when Bitcoin is tackled as a store of value is its ability to be exchanged without losing or depreciating its value and due to the high volatility of Bitcoin and impatience people, tends to exchange Bitcoin at a loss but those who are patience enough had proven Bitcoin to be a good store of value for an obvious reason.

I guess it would be a long argument whether Bitcoin is a good store of value or not and the stance is dependent on how these people use or see Bitcoin.  The determining factor that says Bitcoin is not a good store of value is its high volatility but it gets debunked by the fact that Bitcoin indeed increased in price throughout history making its purchasing power multiply over time.

[Finestream]

Who said it wasn't a good store of value? Where else can you find an asset that would turn your asset 10000x in a span of 10 years, 5000x in less than 3 years?

I reckon that the only ones who think bitcoin's a bad store of value are those who don't see the point of investing in bitcoin in the first place are those who lost horribly due to poor financial decisions a few years ago lol. Bitcoin's not a quick cash grab that you can buy now and expect to pump tomorrow, you have to have the patience of the fucking Buddha to earn millions in this shit but for the most part it only ever requires you to really hold your money until such a time. It doesn't ask you to do anything else.

Bitcoin's one of the best stores of value out there if you know how stores of value work in the first place. Anyone can buy bitcoin and gold or any other store of value out there for that matter, but the ones who win massively in this rendezvous are those who know their shit, those who know how to wait, and those that don't get easily swayed by FUD.

Bitcoin's volatility open us to a lot of profit opportunities and make it big in the future. Of course, those who don't believe with bitcoin in the first place will never realized this, but for those who try to take the risk and become patient all the way, those were the people who can prove that bitcoin's volatility enable them to be highly profitable as long as they have clearly understood how bitcoin's volatility works in the market. People who remain negative with bitcoin might be living in regrets right now, wishing they have trusted bitcoin in its early years.

[yhiaali3]

Yes, this is absolutely true. Despite Bitcoin’s volatility, reality proves that it is the best store of value because it has one long-term path, which is upward. It is true that Bitcoin is volatile and the price goes down and up, but the long-term curve is only upward, and this is what makes it a store of value.

Unlike fiat, which we see as stable in the short term but constantly losing value as a result of inflation and other economic factors, this is why many people, institutions, and even governments use Bitcoin as a store of value in the long term.

[reagansimms]

I completely agree with these words "Volatile things are not necessarily risky", the volatile nature of Bitcoin is the reason investors are very interested in investing in Bitcoin rather than saving fiat money which is not resistant to inflation. In terms of storing value, Bitcoin has shown its strength and has been proven over many years to provide investors with the pleasure of experiencing large profits. Bitcoin is able to maintain its purchasing power and its price continues to increase over time, in the process of waiting for it to reach the desired price level, Investors can take advantage of Volatility to increase the number of their assets.

The ATH that has just been passed indicates that the price of Bitcoin will continue to increase, although in the process of getting to the ATH there are many temptations such as negative issues that can make the price of Bitcoin tilt slightly, but it is an opportunity to get Bitcoin when it is traded at a slightly cheaper price. Investors must always believe that Bitcoin has great potential and is the most profitable store of value in the long term, its volatile price is a spice in achieving its goals. A decline is an opportunity to increase the number of assets, while an increase in prices is the right time to reap the results that have been planted so far.

[Yatsan]

Has its pros and cons; with its market price then yes so far numbers could support this claim, I just wonder until when? Will the demand be consistent over the years? Will its market price just continue to increase? No assurance but still, it is a good storage of wealth especially at this moment wherein we saw how far it climbed up from being in deep market crash. Problem in some countries, is its accessibility and usage in line with daily expenses wherein not all countries have fully recognized its usage. If it is overall security and stability of value (yes, some people prefer this with store of value) then fiat still has advantages over cryptocurrencies but if it is with profitability then the answer is quite obvious.

It's barely certain for most people about bitcoin being a nice store of value. Because they're sidetracked by its volatile nature, many, still, wouldn't trust saving money through bitcoin. In his book Skin in the game Nassim Taleb said; “Volatile things are not necessarily risky, and the reverse is also true.” Coupled with the viral term Bitcoin is risky due to its volatile nature, lots of potential investors don't risk taking this precious savings opportunity. Over this period of years, time has proven that bitcoin's volatility doesn't make it a risky store of value. Paying attention to the reverse of Nassim's statement, let's make dollar an example; Dollar is not volatile, but, it's a bad store of value, inflation affects dollar's value over the years.

Bitcoin's volatility is only effective for short term players same as dollar's stability. Ultimately bitcoin remains a better store of value than dollar despite being a volatile asset.

Share your insight.

My idea was taken from this article: https://unchained.com/blog/bitcoin-is-not-too-volatile/

We have known this for a long time, it is just that people hate the volatility even if it plays on their favor, this is why many people still prefer to keep their savings on fiat currencies despite the fact that governments steal from them every single time they print more currency, however as inflation becomes more of a problem, I expect more people to wake up and recognize the truth, which in turn could push the price up and it could help bitcoin to reach a new ATH.

Actually, you'd still be affected by inflation even if you choose to divert your wealth into cryptocurrency simply because it is the value of marketable goods which are increasing and not the idea that the value of fiat is declining.

[legendbtc]

Bitcoin's volatility open us to a lot of profit opportunities and make it big in the future. Of course, those who don't believe with bitcoin in the first place will never realized this, but for those who try to take the risk and become patient all the way, those were the people who can prove that bitcoin's volatility enable them to be highly profitable as long as they have clearly understood how bitcoin's volatility works in the market. People who remain negative with bitcoin might be living in regrets right now, wishing they have trusted bitcoin in its early years.

People often talk about bitcoin's use cases or praise its decentralized nature, but I believe most people are attracted to it because of its volatility.
Indeed, bitcoin's volatility can be said to be an advantage if one can leverage it to generate huge profits. But on the contrary, those who do not trust bitcoin and consider its volatility too risky will lose the opportunity to make profits.

It can be said that bitcoin's volatility is an advantage or disadvantage depending on each person's perspective. For those who don't like risk and don't like roller coasters, there's nothing wrong with not liking bitcoin, not liking its volatility.

[justdimin]

I completely agree with these words "Volatile things are not necessarily risky", the volatile nature of Bitcoin is the reason investors are very interested in investing in Bitcoin rather than saving fiat money which is not resistant to inflation. In terms of storing value, Bitcoin has shown its strength and has been proven over many years to provide investors with the pleasure of experiencing large profits. Bitcoin is able to maintain its purchasing power and its price continues to increase over time, in the process of waiting for it to reach the desired price level, Investors can take advantage of Volatility to increase the number of their assets.

The ATH that has just been passed indicates that the price of Bitcoin will continue to increase, although in the process of getting to the ATH there are many temptations such as negative issues that can make the price of Bitcoin tilt slightly, but it is an opportunity to get Bitcoin when it is traded at a slightly cheaper price. Investors must always believe that Bitcoin has great potential and is the most profitable store of value in the long term, its volatile price is a spice in achieving its goals. A decline is an opportunity to increase the number of assets, while an increase in prices is the right time to reap the results that have been planted so far.

I agree with that, volatility is the reason why so many traders are in love with bitcoin as well, that is just how it works for us. I understand that not a lot of people could see that working, I understand that it may not be all that easy to keep it going, but just need to make sure that we know what we are dealing with.

I hope that we could see something changing for a long term, and I think that will definitely be easy to handle when the time comes as well. We also have long term upwards movement as well, I know that a lot of people are worried about long term meaning of volatility, but while it's volatile for the short term, if you zoom out and look at it, it goes up on the long term as well. So, it is good for both trading AND holding.

[Questat]

Yes, this is absolutely true. Despite Bitcoin’s volatility, reality proves that it is the best store of value because it has one long-term path, which is upward. It is true that Bitcoin is volatile and the price goes down and up, but the long-term curve is only upward, and this is what makes it a store of value.

Unlike fiat, which we see as stable in the short term but constantly losing value as a result of inflation and other economic factors, this is why many people, institutions, and even governments use Bitcoin as a store of value in the long term.

In fact, bitcoin’s volatility is what makes this bitcoin investment very exciting and interesting. Because no matter where we look at it, it’s volatility is the best reason why we end up highly profitable even in the least expected time. Although there are times that it’s price pull us down, but once it recovers, it will also lead us to a very exciting and thrilling price, until we end up seeing our investment at the peak of its price all of a sudden.

[d5000]

In fact, bitcoin’s volatility is what makes this bitcoin investment very exciting and interesting.

I have read several variants of this claim in this thread. And I think while there is a small amount of truth in it -- Bitcoin would not be where it is now without the wild price swings -- it is not relevant to assess the future value of BTC.

If volatility is the characteristic attracting someone, then altcoins for example are much "better" than Bitcoin. You maybe have a lower trading volume, but the volume of big altcoins like Solana, Ripple, Doge or Tron is large enough to perform all kinds of trading strategies without major losses due to a lack of liquidity. In theory altcoins would have then to be more valuable than Bitcoin judging by this "virtue"

But I believe the reason why Bitcoin is mainly invested in, is not that. It's that people have a glimpse of hope that it could become eventually a leading world currency, or at least a reserve asset like gold.

The big problem on the way towards that "utopia" is not so much volatility but what one could call vulnerability to panic. Many Bitcoin hodlers fear that there is some truth that Bitcoin is not valuable at all, that the next bull market could be the last one, and thus they will panic very fastly if the price goes down. And as long as Bitcoin is mainly used as a speculative vehicle it's possible that one of these crashes destroys all support lines and we go to e.g. $10.000 back again. I don't say this is likely but it's not impossible.

If we can't fight volatility efficiently, vulnerability to panic is perhaps easier to "attack". I could imagine instruments like DLCFDs (a CFD-like contract between a long and short position where one of both parties is guaranteed a stable price and the other party can benefit from a price increase) becoming more popular to hedge against crashes. If such contracts are included in open source wallets I can imagine Bitcoin becoming soon more popular as a "bank account" replacement, at least for those who can afford still losing some money in crashes and bear markets, or hodl through them.

Also merchants can back Bitcoin's price with promotions during bear markets ("buy goods with BTC to yesterday's price", see here).

[AmoreJaz]

People often talk about bitcoin's use cases or praise its decentralized nature, but I believe most people are attracted to it because of its volatility.
Indeed, bitcoin's volatility can be said to be an advantage if one can leverage it to generate huge profits. But on the contrary, those who do not trust bitcoin and consider its volatility too risky will lose the opportunity to make profits.

It can be said that bitcoin's volatility is an advantage or disadvantage depending on each person's perspective. For those who don't like risk and don't like roller coasters, there's nothing wrong with not liking bitcoin, not liking its volatility.

Volatility aspect of bitcoin is one of the top features why people are into this market. The promise of earning good is the major reason why they are trying their hands on getting some of this digital currency. It is not because of its decentralized nature or the transparency aspect, but the hope of getting high profits owed to volatility is the top reason why most are here. Other features are just secondary.

Bitcoin is not bad and it's proven that it's best performing investment asset in the last decade but look at gold it's price is not volatile but not giving much returns to beating the inflation which makes it best option for store of value.

This is what the traditional investors like. They don't like the high volatile assets because that seems to be the real risk that they can't take. As for gold's move, that's a low return and yet securing for them and that's very applicable to the conservative investors that don't want to deal with too much risk. And with that, we've got the choice whether to take it or not, we that has chosen this risk from Bitcoin earns from its volatility and it has become part of our lives already. We can tolerate these risky investments but not coming to the point of understanding a scheme that's likely to scam and still take it, what's good with this is we can detect sketchy investments and see signs of having red flags.

For crypto users, it is understandable that they will promote btc as investment but for traditional ones, they will stick to gold or other tangible assets. Well, this move depends on the investor himself, how he is being oriented in various types of investment and to what extent of risk they can handle.

[slaman29]

Most people completely ignore the fact that Bitcoin is such a young market. Any young market is going to be super volatitle, and for a long time, in period of minutes, hours, days, weeks.

The older the market, the less volatile, but if you pull the time duration out, actually all assets are volatile. Including gold!

Just look at gold price for past 20 years, and tell me that's not volatile?

So we need the perspective of market age, and timeframe.

Store of value over days and weeks is not a good timeframe. Store of value every few years? Yes.

And now ask the same for altcoins and you understand why they are totally shit.

[shinratensei_]

Most people completely ignore the fact that Bitcoin is such a young market. Any young market is going to be super volatitle, and for a long time, in period of minutes, hours, days, weeks.

The older the market, the less volatile, but if you pull the time duration out, actually all assets are volatile. Including gold!

Just look at gold price for past 20 years, and tell me that's not volatile?

So we need the perspective of market age, and timeframe.

Store of value over days and weeks is not a good timeframe. Store of value every few years? Yes.

And now ask the same for altcoins and you understand why they are totally shit.

This is what in my mind as well, people judge nascent, not matured asset by volatility, of course they'd find out that the price fluctuates a lot but over the course of the year and as the FDV grows it will be more stable.

the same people will probably say a blue chip stock is a good store of value meanwhile at these blue chip stock early stages it's also full of price volatility as well, the price swing as wide as BTC in its early days.

i'd say, give BTC time eventually it will find equilibrium and BTC will start become more stable eventually.

[legendbtc]

....

....

Volatility aspect of bitcoin is one of the top features why people are into this market. The promise of earning good is the major reason why they are trying their hands on getting some of this digital currency.

I'm pretty sure that more than 90% of people enter this market because of its volatility and not because of its use cases. And it can also be denied that some people have decided not to invest in bitcoin because of its volatility, simply because they do not like to risk too much.

I have some friends who are real estate investors who also know about bitcoin and they don't hate or oppose it. But they don't invest in it because they think its volatility makes them feel insecure. So it can be said that bitcoin's volatility can sometimes be an advantage but can also be a disadvantage.

[Distinctin]

Bitcoin could be a threat for beginner investors as they could lose in an instant when the value of bitcoin drops to its lowest and they decide to panic selling. But what they don't know is that they won't be susceptible to losses if they chose to hold more than rushing to sell their coins to cut their losses.

Bitcoin's volatility makes it a bad store of value if they don't understand how volatility works in the market, but if they are more than aware that with volatility, they can be instant millionaire when they least expect it, that's obviously makes bitcoin a good store of value simply because of its high volatility.

[slaman29]

Most people completely ignore the fact that Bitcoin is such a young market. Any young market is going to be super volatitle, and for a long time, in period of minutes, hours, days, weeks.
<>

This is what in my mind as well, people judge nascent, not matured asset by volatility, of course they'd find out that the price fluctuates a lot but over the course of the year and as the FDV grows it will be more stable.

the same people will probably say a blue chip stock is a good store of value meanwhile at these blue chip stock early stages it's also full of price volatility as well, the price swing as wide as BTC in its early days.

And that goes to show just what kind of people we have in mainstream trading. Not proper traders but amateur gamblers, who see one asset the same as others, and whining about volatility. We all remember before 2000s blue chip tech stocks that exist today had crazy crazy volatility. But that's expected. And even today, it's possible for Microsoft to lose 21% in a day, which happened last week.

BTC is ONLY 14 years old around there (based on first market). If it's not volatile, it would be highly strange

[ranochigo]

Majority of the replies seems to have missed the point about the economic concepts of value or are blatantly ignoring the other side of the story. Objectively, d5000 and
The Sceptical Chymist are fairly comprehensive in the different aspects to consider when they talk about the concept of valuation.

What's Volatility? It's an estimation of an asset's price change over a period of time. In a simple term, volatility has nothing with value. Bitcoin price is volatile, but its value is not. And we have to understand that price and value are not necessarily the same. To still mandate the claim that bitcoin's volatility is not necessarily risky, we have to differentiate between volatility and risk.

In economics, we think of value as a form of utility. In essence, this means how much we think a certain amount of Bitcoin is worth. However, as economists, we objectively weigh the valuation of certain currency against a basket of goods or services. This is important because any currency's worth should be able to be estimated. Else, by your logic, then everything is equally valuable.

Volatility is not an estimation of an asset's price change over time. Volatility is the rate of change of the deviation of the asset price over time. Bitcoin is not volatile because we see an increase of a thousand % over the past few years but the fact that it can lose 50% of its value over night.

Price is actually the valuation of a currency, or goods in the quantity of another. Definitely wouldn't make sense if I start telling people my Bitcoins are equally valuable at as much as yesterday when FTX just collapsed.

Do you know what risk is? I'd help you with that, risk shows the possibility that an asset A will suffer the loss of a reasonable part or its complete value. Over the years Bitcoin has been valued at 1BTC = 1BTC which simply means that Bitcoin like any other volatile asset is only risky to short term players, whose thoughts coincides with your response; bothering themselves with its volatile price shift and the government's regulation.

By your logic, then 1 USD = 1 USD, 1 EUR = 1 EUR. Economists use a myriad of factors to estimate risk, and part of why Bitcoin is often thought to be risky is because it is not backed by any financial institutions in the world. Let's say people think of that Bitcoin doesn't have a future in the financial systems, owing to various reasons (better alternatives coming about, low acceptance rate, bleak future), then the price would definitely drop. Combined that with the lack of backing of any financial systems in the world, no one is going to bail us out. Using the correct definition of value, and the correct definition of risk, then Bitcoin is risky. Bitcoin's utility can be lost overnight.

In terms of investment timeframe, you would expect S&P500 to be good for the long term because it diversifies your holdings into numerous big corporations. However, say if Bitcoin has never received the endorsement of the larger investment funds or gained its popularity owing to the various crypto-friendly government initiatives, then it wouldn't be as valuable as it is now. That is the main characteristic of a free market.

Every economists should agree that crypto is generally perceived to be one of the riskier investments. Let me know if any economists says otherwise  

And because everyone is deeply concerned about bitcoin's price they fail to recognize how powerful its value is to long term traders. In a nutshell,  like the title of my thread, Bitcoin is never a bad store of value. Dollar is risky because of the high rate of losing its value to inflation, despite its nonvolatile price. To heck with the price, value is what matters, and remains the foundation of this thread. Goodluck.

1USD = 1USD so your logic also means the value remains the same. My 1USD doesn't become 0.9USD over time due to inflation, similarly to how your Bitcoins doesn't increase in quantity due to deflation. However, we know that is not true because the utility decreases either due to inflation or deflation. Hence, the value decreases.

Similarly, with no guarantees whatsoever that Bitcoin's value would increase or at the very least remain the same, then Bitcoin cannot be perceived as a good store of value. In the free market, Bitcoin's demand could rise or drop, which leads to a higher utility or a lower utility respectively.

[SickDayIn]

The volatility is measured in USD, a deflationary fiat currency. This is the number one thing people fail to realise.