Bitcoin volatility is lower than Tesla, Nvidia! Fidelity: Low volatility is a precursor to price surges

This site (120BTc.coM): According to the latest data, as of May 11, Bitcoin’s actual volatility over the past year was only 44.88%. In comparison, top technology stocks including Tesla, Meta, and Nvidia all have annualized volatility of over 50%. It can therefore be said that the volatility of Bitcoin has decreased significantly and global markets regard it as a more mature and stable investment asset.

BTC volatility is relatively low in the S&P 500

Taking a closer look at Fidelity’s report, Bitcoin volatility is relatively low in the S&P 500 Index is relatively low among about 500 companies. Analysts pointed out: Based on October 2023 using 90 days of actual historical volatility data, Bitcoin is actually less volatile than 92 stocks in the S&P 500, some of which are large-cap and mega-cap stocks.

Annualized volatility, this volatility also marks its characteristics as an emerging asset class. Zack Wainwright, a research analyst at Fidelity Digital Assets, said that this kind of high volatility usually occurs when new capital joins the market, especially when these capitals are small relative to the existing market size.

However, these new capital inflows are enough to cause price changes, especially in emerging markets where the market size is not yet large and the number of participants is limited. In these markets, even small purchases and sales can result in significant price movements because the market is immature and does not have sufficient trading volume to absorb the impact of these new funds.

As time goes by and the market matures, Bitcoin’s volatility has decreased. This process can be seen in the long-term volatility trend chart, where the regression line slopes significantly downward, showing that Bitcoin’s price fluctuations are becoming increasingly smoother as market acceptance increases and trading activity increases.

Bitcoin volatility decreases as market capitalization increases

Zack Wainwright also pointed out that Bitcoin’s volatility pattern is similar to gold’s volatility in the early market. Gold also experienced similar stages of price discovery and volatility adjustment after the decoupling of the U.S. dollar in 1971 and during the period when privatization was legalized and inflation soared in 1974. During these periods, the gold market also showed initial high volatility, which gradually stabilized as the market matured and received more policy support.

Low volatility is a precursor to rising prices

In addition, it is worth noting that Zack Wainwright said that periods of low volatility mean that Bitcoin prices change less and the market is relatively calm. This stable environment could set the stage for future price increases. Among them, he cited four examples from past markets for reference, one of which occurred in early 2024, and the other three also experienced sharp price increases after experiencing low volatility.

These examples suggest that when Bitcoin’s volatility reaches unusually low levels, it may be a sign that the market is about to turn. During these periods, because prices don't move much, investors may increase their holdings or new investors may enter the market, which increases buying pressure and can cause prices to rise quickly once market sentiment shifts.

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