How many times have you heard the bitcoin is too volatile? Too dangerous to invest in? Well, over the last 20 days, bitcoin has proven more stable than Netflix, Amazon, and Nvidia stocks.
Bitcoin is only slightly more volatile than Apple – the largest company on the planet, and the Nasdaq 100 index as a whole.
The data, reported in Market Watch, refers to the 20-day historical volatility (HV). The measure is used by traders and investors to identify particularly volatile assets.
Bitcoin’s 20-day HV is at 31.5% as of October 22nd. Compare that to Amazon’s 35%, Nvidia’s 40%, and Netflix’s 52%.
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Stock Market Correction at Play
Admittedly, the Nasdaq is now in correction mode (down 10% from its high), so tech stocks are fluctuating more than usual. At the same time, bitcoin has settled in a small range with low volume.
We should also point out that bitcoin’s 20-day HV is rarely so mellow. In January, when bitcoin prices slipped from their $20,000 highs, the 20-day HV hit 140%.
Fast forward to today and bitcoin volume is approaching yearly lows. With lower volume comes less explosive market movements. Many have suggested this quiet period is one of consolidation for bitcoin, a time of indecision which some investors are using to build their positions.
Bitcoin’s Relationship with Stocks
Bitcoin’s recent stability means it could theoretically provide an alternative to stocks during volatile market movements.
However, bitcoin isn’t yet acting as the “store of value” it has often been touted as during a stock market decline. If that were the case, we’d see a large spike in bitcoin volumes as the tech stocks fluctuate.
We’re not seeing that. Instead, traders are still turning to traditional “safe havens” like gold.
That may change in the future as Wall Street giants like Fidelity and J.P. Morgan slowly build infrastructure around bitcoin. With more institutional access to cryptocurrency markets on the way, we are more likely to see this dynamic come into play.
For now, take heart in the fact that your money is more stable in bitcoin right now than Amazon stock.
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