Perception often diverges from reality—especially regarding Bitcoin’s volatility. While many assume Bitcoin is far more volatile than traditional assets, data tells a different story. This analysis revisits Mieszko Mazur’s 2022 study, Misperceptions of Bitcoin Volatility, updates its findings with 2020–2024 data, and challenges prevailing biases.
Bitcoin’s Evolution: From Whitepaper to Trillion-Dollar Asset
Early Days vs. Mainstream Adoption
- 2008: Bitcoin emerged as a niche concept in Satoshi Nakamoto’s whitepaper.
- 2024: It boasts a ~$1.3 trillion market cap, cementing its role as a benchmark digital asset (CoinMarketCap).
Despite its growth, debates persist—often centered on volatility. Vanguard CEO Tim Buckley recently dismissed Bitcoin as "too volatile" for long-term portfolios. But does the data support this claim?
👉 Discover how Bitcoin’s volatility compares to stocks and commodities
Mazur’s Key Findings (2020–2022)
Methodology
Mazur analyzed Bitcoin’s behavior during the COVID-19 market crash (March 2020), focusing on:
- Relative volatility rankings (vs. S&P 1500 stocks).
- Daily realized volatility.
- Range-based realized volatility.
Results
- Bitcoin was less volatile than ~900 S&P 1500 stocks during the crash.
- Outperformed assets like oil and EU carbon credits in stability.
- Long-term trend: Daily volatility declined significantly over a decade.
2020–2024 Update: Our Analysis
Methodology Adjustments
- Used percentile rankings for clearer interpretation.
- Replaced EU carbon credits with ETF KRBN.
- Focused on BTC/USD pair.
Exhibit 1: Relative Volatility Rankings
| Period | Bitcoin’s Percentile Rank (S&P 1500) |
|-----------------|--------------------------------------|
| Nov 2020–Feb 2024 | ~80th percentile |
| May 2020 | Below median |
Insight: Bitcoin’s volatility spiked during crises but often aligned with mid-cap stocks.
Exhibit 2: Absolute Daily Volatility Decline
| Year | Peak Annualized Volatility |
|------|----------------------------|
| 2021 | 97.3% |
| 2023 | 65.7% |
Trend: Peaks grew progressively lower post-2020.
Critical Takeaways
- Volatility ≠ Chaos: Bitcoin’s daily volatility has declined over time.
- Media Bias: Range-based volatility (emphasized in headlines) exaggerates swings.
- Context Matters: During stable periods, Bitcoin often rivals S&P 500 stocks.
👉 Why institutional investors are re-evaluating Bitcoin
FAQ Section
1. Is Bitcoin still too volatile for portfolios?
While riskier than bonds, its volatility now resembles small-cap stocks—making it viable for diversified strategies.
2. Why does range-based volatility differ from daily?
Daily metrics smooth extremes; range-based captures intraday swings (e.g., +1.74% higher in our data).
3. How does regulation impact volatility?
Growing oversight (e.g., ETFs) may further stabilize prices by reducing speculative trading.
Conclusion: Reality Over Perception
Bitcoin’s volatility narrative needs nuance. Data shows:
- Declining daily volatility.
- Comparable ranks to equities in crises.
- Misleading headlines amplify range-based swings.
As adoption grows, analytical assessments—not knee-jerk reactions—will shape Bitcoin’s financial role.