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Bitcoin’s volatility rates fall as daily returns move away from ‘extreme behavior’ territory

Akash Anand



Bitcoin's volatility rates slide as daily returns move away from 'extreme behavior' territory
Source: Pixabay

Bitcoin [BTC] has had a remarkable recovery since the start of the year, with significant positive growth in both price and market cap.

Analysis of the coin’s prices and returns show that Bitcoin’s volatility declined as monetization of the cryptocurrency increased. Since its inception, the cryptocurrency’s returns have been more evenly spread out, with daily returns shuttling between the ranges of negative 35 percent and a whopping positive 40 percent.

As the years have passed by, it was noted that Bitcoin’s volatility collated into smaller ranges, indicating a switch from extreme highs and lows to a calmer and controlled price movement.

Taking 2019 alone, the chart showed that the returns fell in the negative 10 to positive 10 range, a far cry from the previous lows and highs. The analysis suggests that the returns on the ‘king coin’ this year were mostly governed by the sideways movement carried over from the fag end of 2018.

The bear market’s influence was evident as the probability density of returns fell largely in the single digit area. We can use this data to make the case that Bitcoin today, is moving more and more towards the ‘store of value’ asset category, rather than being just a speculative trading commodity.

Despite the clamp being formed in terms of returns, Bitcoin has still managed to climb slowly and steadily on the price charts with some peaks providing more returns than mainstream commodities like gold and the S&P 500. Recent research stated that Bitcoin had significantly outperformed the S&P 500 in terms of long-term returns and risks attained.

The data stated that since 2013, any investment that comprised of 5 percent Bitcoin and 95 percent fiat currency gathered more returns and less risk than the S&P 500. Bitcoin’s case was made stronger when it as revealed that during the aforementioned time period, the cryptocurrency was affected by a maximum loss of approximately 5 percent, while the S&P 500 suffered a loss of 6 percent last year alone.

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Bitcoin is an enterprise; its users are comparable to traditional shareholders, claims Goldmoney Founder




Bitcoin: Age old discussion about Bitcoin being a commodity or security brought to life; Could it be a security?
Source: Unsplash

Bitcoin was conceived in the backdrop of banks bailouts and the 2008 financial crisis. The recession and the loss of faith in banking, financial institutions gave Bitcoin a platform to rescue the ones affected, giving them hope for a better financial system without the hassle of corrupt institutions. With the rise of Bitcoin’s fame, both in the darknet and in the mainstream, questions about its regulations had to arise.

The question was put to rest when the SEC/CFTC ruled Bitcoin as a commodity and taxed it. However, Goldmoney’s Roy Sebag brought this discussion up again recently in his tweet thread, where he said that Bitcoin as an enterprise is working towards its good, comparing its users to traditional “shareholders” among other things, while concluding that Bitcoin is a security. He tweeted,

“Is Bitcoin a security? <10 years old so regulators haven’t even had enough time to truly learn how it works (think Napster or Kazaa in early days). Miners are clearly issuing coins and responsible for governance, an absence of formal relations among them is irrelevant….”

In successive tweets, Sebag attributed miners with the role of “stewarding” the so-called enterprise. In return, these miners get paid in “direct fees” or in “share appreciation.” In Bitcoin’s case, it is the mining reward, which is “BTC”. Similarly, buyers are compared to “shareholders” with a common interest in the enterprise, i.e. profit. Sebag added,

“Coins trade at exchanges. The common enterprise is designed for the price appreciation of coin.”

Bitcoin could face a shutdown by the government, just like it did with big players in file sharing, said Sebag, who added that Bitcoin could also be interpreted as a security under the “34 act of the SEC.” The Goldmoney Founder concluded that “this realization rests on the belief that neither Bitcoin nor any common enterprise is truly decentralized.”

However, his inputs weren’t very well-received by many in the crypto-community. Casa’s CTO Jameson Lopp refuted Roy Sebag’s ideas, tweeting,

“Roy will believe what he wants to believe, though if he’s not actually participating in Bitcoin then his beliefs are irrelevant to its consensus formation.”

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