Investors Overestimate the Benefits of Bitcoin Volatility: Fidelity

Investors often overestimate the volatility of Bitcoin and the potential risks associated with it, according to research conducted by Fidelity Digital Assets. The prevailing view of Bitcoin’s volatility is exaggerated, leading to misconceptions about the cryptocurrency’s risks and opportunities. Recent data indicates that Bitcoin may be less volatile than previously believed, even when compared to high-profile stocks like Netflix. Over the past two years, Bitcoin’s volatility has been lower than Netflix’s, suggesting that Bitcoin is gradually maturing as an asset class. This trend is further supported by the approval of several spot Bitcoin exchange-traded products in the US, which has contributed to a steady increase in Bitcoin’s price and a decrease in realized volatility. Contrary to popular belief, Bitcoin’s volatility is not an outlier among influential stocks, indicating that the market often overestimates its volatility. Like gold, which experienced high volatility initially but stabilized as an independent asset, Bitcoin’s recent behavior suggests that it may be on a similar trajectory towards stability and significant growth potential. While past performance is not indicative of future results, historical data shows that Bitcoin tends to experience large price increases once all-time highs are reached and subsequently broken. Fidelity’s research suggests that investors should be cautious of pricing in risks that may not be as significant in actual price movements, as this could result in an exaggerated view of Bitcoin’s instability.