Its price has been multiplied by more than six this year but, in return, its volatility has also doubled.
At $ 6,150, bitcoin has had an exceptional year. Having emerged from the shadows of the informal economy for several years, the leader in cryptographic currencies has become the speculative asset of many investors. The crisis in Spain has been able to give it a boost because this currency is surmounting crises and the $ 10,000 mark could come within a few weeks.
Its volatility has been declining since 2011, but it has once again increased this year with the soaring 2.0 currency and “tokens” market, and the more than six-fold increase in the price of bitcoin to $ 6,150. Its daily volatility has nearly doubled in 2017. If it had continued on its downward slope and at the same pace, its volatility would have reached that of major currencies in 2019-2020, according to a study. But that was not counting the bubble of “ICO” .
Macroeconomic announcements in the US, China and Europe have an impact on the volatility of bitcoin, which may mean that its behavior is gradually approaching that of a traditional currency. However, bitcoin is still almost 30 times more volatile than the euro , dollar or yen.
Speculative asset or currency
For now, the excessive volatility of bitcoin is a brake on its use as currency . This particular volatility is marked by a high number of extreme movements , sessions of very large increases or decreases .
Attracted by the irrational exuberance of “ICO”, speculators turn away from bitcoin to make a fortune on “tokens”.
According to studies (2), the volatility of bitcoin remains very high compared to about 40 currencies of less developed countries (Afghanistan, Angola, Cambodia, Ethiopia, Haiti, Sudan …) and over the period from March 2014 to March 2017. None of these currencies are more volatile than bitcoin over the entire period with the exception of Sudan. The currencies of Liberia, Madagascar, Mauritania, Rwanda and Sierra Leone are sometimes more volatile than the cryptographic currency but only 10% of the time. Bitcoin is three times more volatile than the currencies of all these developing countries.
Less risky than crypto
In contrast, bitcoin is mostly less volatile than other cryptographic currencies that have emerged in its wake (Litecoin, Ethereum, Monero, NxT, Ripple, Zcash …). Thus, Digital Cash is 6 times more volatile than bitcoin, while Monero and Ripple are three times more volatile. In general, the volatility of cryptographic currencies evolves in the same direction as that of bitcoin, with the exception of Zcash whose volatility is moving in the opposite direction. Thus, phases of rising volatility impact all cryptographic currencies . The biggest risk for the 2.0 currency sector is a further bankruptcy of one of the big bitcoin exchanges.