The cryptocurrency universe and bitcoin is still in its formative stages. Despite its relative youth, the digital currency space has rapidly gained a reputation for volatility.
While bitcoin, the largest digital currency by market value, is volatile relative to traditional financial assets, such as bonds and equities, it is not close to being the most volatile cryptocurrency.
“Now we find that bitcoin is consistently less volatile than four other widely traded cryptocurrencies: litecoin, ripple, ethereum, and Bitcoin Cash. Looking at simple measures of volatility across digital assets also reveals some common patterns over time and interesting potential trends,” writes Max Gulker of the American Institute for Economic Research in the Epoch Times.
Other recent data points indicate bitcoin volatility is actually declining.
“Bitcoin’s rolling 30-day annualized volatility has sunk to around 61 percent, up modestly from its low of 50 percent earlier this month, according to an analysis from Pension Partners,” reports CNBC. “Still, this volatility pales in comparison to the annualized volatility seen last year, north of 150 percent.”
Bitcoin has been in a tailspin since early May and some traders believe the digital currency needs to make significant gains before market participants turn bullish. By some estimates, bitcoin would need to jump 30% to legitimize any rallies from current levels. A move of 20% typically confirms a new bull market.
Related – Bitcoin Price Prediction: $5,350 in Bear Market
Bitcoin Consistently Less Volatile
Among the five aforementioned cryptos, bitcoin is consistently the least volatile.
“By our measure, in every year, bitcoin is the least volatile of the five cryptocurrencies we study. bitcoin reached its lowest average daily price movement, less than 2 percent, in 2016, before rising again to around 4 percent both in 2017 and 2018,” according to the Epoch Times.
Data suggest that as some of the major cryptos age, their volatility starts to move closer to bitcoin’s.
“For instance, in 2013 ripple’s average daily price movement was a full five percentage points higher than bitcoin’s (9 percent compared to 4 percent), but less than one point higher in 2016 (both had less than 2 percent). The exception is 2017, when all cryptocurrencies except ethereum saw significant upticks in average daily price movement,” reports the Epoch Times.
For more information on the cryptocurrency market, visit our Bitcoin category.