2024-07-11 02:40:00 ET
Summary
- Bitcoin has exhibited strong performance in the past decade, but its long-term uptrend has been accompanied by immense volatility and large drawdowns along the way.
- Bitcoin’s volatility remains elevated at 3.9 and 4.6 times that of gold and global equities, respectively. But bitcoin’s volatility has consistently declined alongside the industry’s maturation in recent years.
- While bitcoin’s volatility is high in absolute terms, it’s in the same realm as many familiar investments, like certain mega cap tech stocks such as Nvidia, Tesla, and Meta.
- Investors considering a bitcoin allocation should take a measured approach that not only considers the potential upside that could come from investing in bitcoin but also its volatility and risks. Small allocations, regular rebalancing, and dollar cost averaging may help smooth out the ride.
By Jay Jacobs
Decoding Bitcoin's Volatility
Bitcoin has become a globally recognized asset since its emergence 15 years ago. Regarded as the first global digital payment method to gain broad global adoption, Bitcoin is a global monetary instrument that can be transferred directly between two people anywhere in the world, in near real-time. From 2014 to 2023, bitcoin was the best performing asset and held the top annual spot seven of those 10 years. But bitcoin was also the worst-performing asset in the other three years, demonstrating both the highs and lows of this asset. Over that time period, bitcoin still averaged a 50% annualized return through these ups and downs, outperforming every major asset class by a wide margin....
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For further details see:
Bitcoin Volatility Guide: Trends And Insights For Investors