Abstract
Bitcoin market capitalization has recently surpassed $1 trillion. According to the popular belief one of the key characteristics of bitcoin is its excessive volatility. This paper provides evidence that high volatility of bitcoin is largely a misperception. We show that bitcoin return fluctuations are lower than those of roughly 900 different stocks in the S&P1500 and 190 stocks in the S&P500. Moreover, we find that bitcoin is less volatile than commodities such as oil and silver, US Treasuries, AAA-rated corporate bonds, EU carbon credits, and some of the most popular technology and media stocks: Apple, Twitter, and Netflix. Equally important, we find that during the March 2020 stock market crash triggered by COVID-19, bitcoin volatility was lower than most of the above-mentioned asset classes. Significant decline in bitcoin volatility over the last decade renders it more “investable” by conservative investors.
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