Since the launch of Bitcoin in 2009, one of the biggest impacts of Bitcoin has been the lack of price stability . In the past decade, Bitcoin’s volatility has been a topic of widespread discussion. Some people believe that the price of Bitcoin is not stable enough to be used as a currency, while others believe that its price is becoming more stable.
To find the truth about Bitcoin’s volatility, we must look at the price of this digital asset and its changes over the years.
Supporters of Bitcoin can tout the digital asset they want, but if its price cannot remain stable, it may never become the global currency for daily purchases . For example, when we consider buying a cup of coffee and walking into any coffee shop, we will all know the price of coffee.
Not only that, but you know that when you return to the same coffee shop tomorrow or next week, the price will not change. This is because the legal currency used to set the price of coffee is relatively stable and does not regularly fluctuate too much. For example, if the base currency fluctuates sharply every day, you may walk into a coffee shop and find that today’s coffee price is 25% higher than yesterday, which is why a volatile currency is not realistic in daily use.
In the early days of Bitcoin, there were no exchanges to facilitate transactions, so it was difficult to value digital assets. It took several years for the price of Bitcoin to rise above $1, but by the end of 2012, its price increased exponentially.
2013 was the year when Bitcoin’s price exploded for the first time. It initially reached more than $100 and then broke above $1,000.
Unfortunately, in the next few years, the price of Bitcoin plummeted by more than 70%, causing the bear market to continue until the end of 2015. However, as the renminbi began to depreciate, the price of Bitcoin once again soared to thousands of dollars.
Then, in 2017, the latest Bitcoin bull market appeared, with the price approaching $20,000. But this price did not last. By the end of 2018, the price of Bitcoin fell below $4,000, and then soared to over $10,000 in June of the same year. But after the relatively calm 2019, 2020 has become a year worthy of attention.
As you can see, historically, Bitcoin has accounted for a considerable share of price fluctuations . However, these volatility has decreased over the years, and price changes have not been so extreme. As you can see, Bitcoin’s volatility peak was the most severe in 2011, and then the peak volatility decreased over time, which indicates that the asset has become more and more stable .
In March 2020, Bitcoin soared above $10,000, which made investors very happy, but caused many people to think that volatility problems are on the rise again.
However, this was short-lived, and the volatility of Bitcoin prices began to decline rapidly after bottoming out in May. In fact, Bitcoin’s volatility has stabilized so much that it is now more stable than oil, emerging market currencies and even the US real estate market.
This is an important milestone for assets that have been considered extremely risky and volatile. In fact, when investigating the risk-adjusted returns of Bitcoin compared to other assets, it seems that the cryptocurrency provides greater stability than its counterparts .
It is true that Bitcoin’s volatility is still much higher than that of traditional fiat currencies, but this does not mean that no progress has been made for many years. In fact, Bitcoin’s volatility is currently at its lowest point in many years and has shown signs of improvement.
The original text comes from bitcoinist, compiled by Blockchain Knight, the English copyright belongs to the original author, please contact the compiler for Chinese reprint.
