As the Dow Jones Industrial Average gives investors another roller coaster ride of volatility today, Bitcoin in the meantime has been exhibiting stability as of late with its price little changed in the last 24 hours, falling just 0.77%, while the Dow is down 100 points as of 12:00 p.m. ET. Based on the 20-day historical volatility metric, the leading digital currency is right there with some of the top tech names, such as Amazon, Apple and Netflix.
To the general public, Bitcoin as a stable investment is a notion that is far-fetched, particularly after its rise in late 2017 to $20,000 and its subsequent fall in value by as much as 70% in 2018. However, its movement as of late has been on par with the tech stocks that helped to fuel the historical bull market run.
“A one standard deviation move for bitcoin at present is about $475,” wrote Kevin Davitt, a senior instructor at The Options Institute at Cboe. “That works out to +/- 7.3% (475/6500). Compare that to earlier this year (mid-January) when bitcoin was around $11,000. Back then the standard deviation measured $4640 or +/- 42%.”
“Perhaps we are witnessing the maturation of a market. It’s far too early to declare this the “new normal” but the persistent range over the last few weeks may be hinting at a structural shift. Time will tell,” wrote Davitt.
Fidelity Jumping into the Cryptocurrency Space
Fidelity is getting into the digital currencies game as the 72-year-old investment firm with more than $7.2 trillion in client assets announced today that it’s launching Fidelity Digital Asset Services, LLC, which will offer enterprise-quality custody and trade execution services for cryptocurrencies to sophisticated institutional investors such as hedge funds, family offices and market intermediaries.
Related: The Key to The First Bitcoin ETF
While the new company won’t cater to retail investors, it’s still a big step forward for digital currencies as Bitcoin and other cryptocurrencies are struggling to gain wider public adoption. In a bid for legitimacy via government regulation, the Securities and Exchange Commission has already rejected nine applications for Bitcoin exchange-traded funds, but is open for comments from investors on pending applications until later this month.
“Our goal is to make digitally-native assets, such as bitcoin, more accessible to investors,” said Abigail P. Johnson, Chairman and CEO of Fidelity Investments in a press release. “We expect to continue investing and experimenting, over the long-term, with ways to make this emerging asset class easier for our clients to understand and use.”
“We started exploring blockchain and digital assets several years ago, and those efforts have been successful in helping us understand and advance our thinking around cryptocurrencies,” said Tom Jessop, head of Fidelity Digital Assets. “The creation of Fidelity Digital Assets is the first step in a long-term vision to create a full-service enterprise-grade platform for digital assets.”
While digital currencies and security has long been a topic of issue, Fidelity addressed this by leveraging the latest in blockchain technology.
“In our conversations with institutions, they tell us that in order to engage with digital assets in a meaningful way, they need a trusted platform provider to enter this space. These institutions require a sophisticated level of service and security, equal to the experience they’re used to when trading stocks or bonds. With Fidelity Digital Assets, we’re building a scalable infrastructure for digital assets that meets the expectations of what it means to work with Fidelity, while leveraging unique capabilities of the blockchain to create a completely new offering,” concluded Jessop.
For more information on the cryptocurrency market, visit the Bitcoin category.