Bobby Lee, co-founder and CEO of a major Chinese bitcoin exchange BTCC, recently stated that the decreasing volatility rate of bitcoin is a sign of maturity which can be served as an evidence to prove that a store of value can, in fact, be digital in nature.
Over the past year, the volatility rate of bitcoin has substantially decreased, moving down from 4.97% in the beginning of the year to 1.41% in December. Bitcoin gained further stability in 2016 as it overtook many reserve or national currencies in market cap.
In the second half this year, the bitcoin industry received significant mainstream media coverage as bitcoin became less volatile than the British pound sterling, which is still considered as one of the major reserve currencies in the world today.
Without a doubt, bitcoin proved its value as a store of value and a global currency in 2016, with low volatility rate and strong performance in terms of price, trading value and market cap.
Praising the lowering volatility rate of bitcoin, Lee stated, “Lower price volatility for #Bitcoin is a good thing; a sign of maturity, that a Store-Of-Value (#SOV) can be digital in nature. $12 billion+.”
While some investors, experts and traders argue that volatility is beneficial for users particularly for assets or currencies like bitcoin that grows exponentially in value, Lee, Andreas Antonopoulos and other leading experts in bitcoin explain that for bitcoin to serve the general population and mainstream user base as a currency, it needs to maintain a low volatility rate.
In mid-2015, when the price of bitcoin demonstrated a rapid surge and increase in demand, Antonopoulos stated, “Don’t be too excited with recent bitcoin short squeeze and rapid price climb. Volatility is bad even when it’s going upwards.”
Most experts in bitcoin and the financial industry agree with the analysis and statement of experts like Antonopoulos and Lee. As bitcoin matures both technologically and economically, it will continue to see an increase in its user base of merchants, millennials and day-to-day users that see bitcoin as a real global currency instead of an alternative asset.
Thus, for bitcoin to maintain its growth and stability, a low volatility rate is crucial for most users and people in the bitcoin network.
For instance, the enhancement in the stability of bitcoin has begun to benefit merchants who rely on bitcoin transactions or payments to sell their products and services both online and offline. Previously, most merchants used a feature that would lock bitcoin payments to a certain value to ensure that they don’t deal with the highly fluctuating price of bitcoin.
Over time, as bitcoin gains more stability and recognition as a global store of value, it will increase in price, active users and reach, establishing itself as a decentralized and efficient store of value for the masses.
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Last modified: May 21, 2020 10:10 AM UTC