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Bitcoin’s volatility is comparable to that of the largest tech stocks, according to an analysis by Ecoinometrics, which highlighted the findings on its X account.
The research indicates that examining monthly volatility over recent years reveals a clear pattern: Bitcoin exhibits similar price fluctuations to other large-cap assets within its market category.
While Bitcoin remains more volatile than gold, it has also delivered higher overall returns compared to the precious metal. "You can't have both low volatility and high returns at the same time," the analysts noted.
What influences Bitcoin’s volatility
Bitcoin’s volatility is driven by various factors, including market liquidity, macroeconomic events, and regulatory developments. As a relatively young asset, Bitcoin’s market remains susceptible to sharp price swings due to a smaller number of participants and lower trading volumes compared to traditional financial assets.
Regulatory news, changes in central bank monetary policy, and macroeconomic crises can significantly impact BTC’s price fluctuations. For instance, the approval of Bitcoin ETFs in the U.S. contributed to price growth, while past cryptocurrency bans in China triggered sharp market declines.
Additionally, market sentiment plays a crucial role, as actions by large investors and retail traders can drive rapid price movements. Given the speculative nature of the crypto market, large buy or sell orders can cause abrupt price shifts within short periods.
Technological changes within the Bitcoin network, such as halvings, fee adjustments, and blockchain infrastructure developments, also have a significant influence on volatility.
Previously, analysts at JPMorgan concluded that Bitcoin exhibits the highest correlation with small-cap tech stocks listed in the Russell 2000 index.
This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.
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