Markets

Skeptic’s lens: Volatility is a feature, not a bug?

Quick Take

  • Cryptocurrency markets are desirable for traders because markets never close, they are lightly regulated and volatile
  • Last month, Bitcoin’s monthly volatility (~25%) reached its highest levels since November 2018 (~27%)
  • In comparison, gold has been more than 8 times less volatile while silver has been about five times less volatile than Bitcoin since 2017
  • Bitcoin was the least volatile cryptocurrency; followed by Ethereum, Zcash, Dash, Monero, and Litecoin

Apart from being a censorship-resistant store of value, Bitcoin’s main use case is trading. What most people, including the media, don’t understand is that’s not inherently a bad thing. 

Bitcoin’s economic activity continues to be dominated by trading on exchanges. Why? Because as opposed to the traditional finance, the cryptocurrency markets never close, they are lightly regulated and volatile.