People used to complain that Bitcoin is too volatile. And I used to respond that volatility is the price you have to pay for positive returns. At the end of the day no one has any business in complaining about upside volatility.
But is this way of looking at it still valid for Bitcoin?
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Will trade returns for volatility
The takeaway
If you don’t have time to read the analysis below here are the main things you should know:
Bitcoin is getting less volatile as time passes in the sense that it sees less extreme events.
But its average volatility is unchanged.
The returns to volatility ratio still place Bitcoin in the top spot when it comes to looking at the returns you get relative to the volatility you have to put up with.
So as a risk adjusted investment over the past 5 years, Bitcoin was a good one.
We’ll go over this returns to volatility ratio below, but first let’s have a look at the current volatility regime.
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