Cryptocurrencies are known for their sharp price fluctuations, but a new analysis has shown that they have become more stable over time.
Cryptocurrency analyst Greeks.live posted his analysis on Bitcoin and Ethereum on his Twitter account. He compared the volatility (RV) of both coins in different time frames from 2014 to 2023.
RV is a measure of how much the price of an asset has changed over a given time period based on historical data. It is often used to measure the risk and uncertainty of investing in an asset.
According to Greeks.live, current one-year RVs for Bitcoin and ETH are 52% and 67%, respectively. This means that the annual standard deviation of daily returns is 52% for Bitcoin and 67% for Ether.
However, these figures are much lower than in previous years. One-year RVs for Bitcoin and Ethereum are still 65% and 88% looking at the beginning of 2023; Looking at 2022, 81% and 106%; returning to 2020, the most volatile year, 92% and 113%; and back in 2014, when ETH was just being born, Bitcoin's one-year RV was over 155%.
“It is an indisputable fact that the overall volatility of cryptocurrencies is declining, which will inevitably force the implied volatility of cryptos to continue crashing to new lows,” Greeks.live wrote.
Implied volatility (IV) is a measure of how much the market expects the price of an asset to fluctuate in the future based on the current prices of options contracts.
A lower IV means investors are less fearful or insecure about an asset's future price movements, and vice versa.
*Not investment advice.
