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Bitcoin Volatility Drops Below 45%, More Stable Than ‘Magnificent Seven’

Last Updated 3 days ago
Shraddha Sharma
Last Updated 3 days ago

Key Takeaways

  • Bitcoin’s annualized 30-day volatility is currently close to 50% after reportedly falling below 45%.
  • Bitcoin’s volatility trend has been downward, indicating potential maturation and stability.
  • BTC price is also indicative of the inflow reduction in the ETF market.

Bitcoin’s volatility over the years has been declining starting from a high of 179% in 2012 to 45% in 2024. 

At current price levels, Bitcoin is indicative of a maturing market and increased stability. Fidelity’s report notes that Bitcoin has lower volatility compared to some mega-cap stocks under the ‘Magnificent Seven‘. The category includes Apple Inc. (AAPL), Microsoft Corporation (MSFT), Alphabet Inc. (GOOGL), Amazon.com Inc. (AMZN), Meta Platforms Inc. (META), Nvidia Corporation (NVDA), and Tesla Inc. (TSLA).

BTC’s Annualized Volatility 

Bitcoin’s annualized 30-day volatility is reportedly close to 50% on May 12. However, it comes after a dip below 45% against some top S&P 500 players according to Fidelity Investments. 

BTC Annualized Volatility | Source: The Block
BTC Annualized Volatility | Source: The Block

Data by analyst Charlie Bilello revealed a downward trend in Bitcoin’s volatility over the years. Starting at a high of 179% in January 2012, Bitcoin’s volatility gradually declined with occasional spikes. By January 2024, Bitcoin’s volatility diminished to 45%, marking a reduction from its earlier levels. A consistent decrease in volatility suggests a potential maturation of Bitcoin as an asset class, indicating a shift towards greater stability.

When we compare Bitcoin’s volatility to a group of top-performing stocks called the “Magnificent Seven,” Bitcoin is not necessarily more unpredictable than the popular stocks like Apple, Microsoft, Alphabet, Amazon, Meta, Nvidia, and Tesla.

Bitcoin Vs S&P 500

According to Fidelity’s recent report , Bitcoin is currently less volatile than some popular mega-cap stocks. The report highlights that, as of late 2023, 92 S&P 500 stocks were more volatile than Bitcoin. This trend has shifted, with Bitcoin less volatile than 33 S&P 500 stocks in 2024.

The report also indicates that Bitcoin’s volatility has been on a declining trend and is expected to continue this trajectory. Despite its volatility, investors have been well-compensated for holding Bitcoin. Fidelity proposes a model that utilizes on-chain data to identify periods of low volatility and high seller energy, which could potentially signal a rise in Bitcoin’s price.

Comparing Bitcoin’s volatility to traditional asset classes, the report underscores that while Bitcoin is more volatile than some, it’s less than many large and popular securities. For instance, over the last two years, Bitcoin has exhibited lower volatility than Netflix stock.

Fidelity’s analysis suggests that as Bitcoin’s market cap grows, its volatility is expected to decrease. This mirrors a similar trend observed in gold, where volatility declined as the asset matured.

While volatility is typically associated with risk, Fidelity points out that Bitcoin’s volatility has often led to disproportionately positive returns. 

Looking ahead, Fidelity suggests that periods of low volatility in Bitcoin’s history have often preceded significant price increases. This is attributed to a decline in seller energy and a maturing market.

Bitcoin Price and ETF Flows

That said, Bitcoin is nearing the $63K price level at the time of writing after weakness for the week ending May 12. 

Rekt Capital points  out that Bitcoin’s price decreased 6.5% below the expected range. 

The price weakness could partially come from reduced inflows in digital asset investment products. CoinShares’ report indicates volumes for Bitcoin Exchange-Traded Products (ETPs) continued to decline, reaching $8b for the week compared to an average of $17b in April. 

There were outflows totaling $5.1m in short-bitcoin ETPs, continuing a trend of outflows over the past eight weeks, totaling $18m.

Impact on Bitcoin 

Bitcoin’s current annualized 30-day volatility hovers close to 50%, following a recent dip below 45%, as noted by Fidelity Investments. 

The decreasing volatility suggests a potential maturation of Bitcoin as an asset class, indicating a shift towards greater stability. 

Despite this volatility, Bitcoin’s price has been resilient, nearing the $63,000 mark despite a recent 6.5% dip below the expected ranges. However, reduced inflows in digital asset investment products, particularly Bitcoin Exchange-Traded Products (ETPs), may have contributed to this weakness, with volumes declining compared to previous months. 

That said, Fidelity’s analysis indicates Bitcoin’s volatility is expected to decrease as its market cap grows, as per trends observed in other asset classes like gold. 

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