Bitcoin (BTC), the world’s leading digital currency that trades over $ 18,000, has become less volatile than many stocks on the S&P 500.
The team of VanEck, a New York-based investment management firm, noted:
“Historically, Bitcoin has been discussed in the news and among investors as a nascent and volatile asset outside of traditional stock and financial markets. Much of the volatility in recent years can be attributed to sensitivity to the small total market size, regulatory hurdles, and generally limited penetration into traditional stock and financial markets. ”
Although BTC continues to be a very volatile asset, it might be surprising for some researchers and investors to know what other well-known or important assets have been even more volatile than Bitcoin (after the COVID-19 outbreak).
Notably, 112 S&P 500 stocks over the past 90 days have shown higher levels of volatility than Bitcoin. There have also been 145 S&P 500 stocks (in total) which have been more volatile than Bitcoin so far this year or since the start of the year (YTD).
About 22% of S&P 500 stocks have been more volatile than the flagship cryptocurrency. About 29% of S&P 500 stocks showed more volatility than Bitcoin YTD, according to a report from VanEck.
The investment firm, which has attempted to launch Bitcoin ETFs (unsuccessfully), noted:
“In our long-term study of bitcoin, we compared the correlations of bitcoin to traditional asset classes and now see another interesting recent trend with its volatility. In our current volatility research, we compared the 90-day and year-to-date volatility – measured by their daily standard deviation as of November 13, 2020 – of bitcoin to the constituents of the S&P 500 Index. We have found that bitcoin had lower volatility than … [many] S&P 500 shares since the start of the year. “
The VanEck team added:
“While there are no US bitcoin exchange-traded funds (ETFs) available today, we believe these products may exhibit similar volatility characteristics – based on the comparison above – than many stocks of well-known indices and ETFs, such as the S&P 500 commodities. “
As recently reported, the price of Bitcoin (BTC) has risen for very different reasons compared to the historic bull run of 2017, according to a recent report from Chainalysis.
As the blockchain analyst firm noted, the price of Bitcoin is increasing as demand for BTC increases at a time when there is “relatively little Bitcoin available for purchase.” While the total supply of Bitcoin in circulation continues to grow each day, as more of the cryptocurrency is mined, the actual amount of BTC available for purchase depends primarily on whether holders want sell their assets or trade them.
Chainalysis quantifies this by keeping track of the amount of BTC held in crypto wallets that send less than 25% of the digital currency they have ever received. The blockchain analytics company calls this BTC offering “Illiquid or investor-owned Bitcoin, versus Bitcoin held in wallets that send more than that,” [it] refers to Bitcoin that is cash or held by a trader. “
Chainalysis points out that at present the amount of liquid BTC in circulation is “similar to what it was during the bull run of 2017”. However, the amount of Bitcoin residing in illiquid crypto wallets is “much higher, currently accounting for 77% of the 14.8 million Bitcoin mined that is not classified as lost, meaning it has not left its bank. current address for five or more years, ”Chainalysis reveals.
The blockchain firm further notes that this “leaves a pool of just 3.4 million Bitcoin readily available to buyers as demand increases.”