Bitcoin, an asset like any other – For several years, bitcoin has had a reputation as an unstable asset, with increased risk due to its high volatility. Despite this statement accepted as true by some speculators, the Italian Formula company brings a second point of view, through a comparative analysis, published on Friday, November 20.
Bitcoin: proven volatility?
Generally speaking, the volatility of an asset is measured using the CBO Vix Index . For Bitcoin , this is the Bitcoin Volatility Index . The value of cryptocurrency is known to be very volatile. For example, over the past 30 days, the currency has grown by 50% .
This instability can be explained by several micro and macroeconomic factors . These different factors are regularly discussed, like so many variables with a very uncertain impact on the price of Bitcoin, like the evolution of the regulation or the integration of bitcoin on new platforms ( PayPal , for example ).
Unlike fiats currencies, bitcoin , like gold, is limited to 21 million units . This fixed quantity therefore makes this asset a real store of value, an argument defended by several banks and investment companies.
Extreme volatility? All is relative
VanEck , a German asset management company, released a report last Friday in which the fluctuations of bitcoin compared to other assets are studied . According to the firm, Bitcoin has long been perceived as an atypical asset with volatility disconnected from traditional markets. However, reality shows that this volatility is no greater than some companies and stocks.
“Much of the volatility of recent years can be attributed to sensitivity to the small total size of the market, regulatory hurdles and generally limited penetration into traditional stock and financial markets. ”
Report the VanEck
For example, on the S & P500 , 29% of stocks were more volatile than bitcoin over the last 365 days. This represents 145 companies in total. Over the last 30 days, this figure is 22% , or 112 companies . So we can see that the king of cryptos is in the high middle in terms of volatility. It is not, however, “totally disconnected” from the financial markets