HomeCryptoBitcoinBitcoin towards greater stability: Fidelity's report predicts lower volatility for the crypto

Bitcoin towards greater stability: Fidelity’s report predicts lower volatility for the crypto

According to the recent report by Fidelity, Bitcoin is showing a reduction in volatility as it progresses as a mature digital asset. 

Fidelity has noticed that cryptocurrency volatility has dropped to historic lows on an annual basis. Furthermore, it has stated that in the last two years Bitcoin has been less volatile than Netflix.

Let’s see below all the details. 

Fidelity: Bitcoin volatility will continue to decrease

As anticipated, Bitcoin (BTC) has long been considered an extremely volatile asset, but its volatility is decreasing. 

This trend is expected to continue as the cryptocurrency evolves, according to a report published on Wednesday by Fidelity Digital Assets.

The analyst Zack Wainwright explained that new assets tend to go through a period of price discovery and stabilization. Even gold, after the United States abandoned the gold standard in the 1970s, showed high volatility.

Over the course of fifteen years, Bitcoin has already begun to show signs of maturity, with volatility at its historical lows on an annual basis. Wainwright commented: 

“We see a clear trend towards a reduction in volatility for Bitcoin over time and we predict that it will continue as the cryptocurrency further stabilizes.”

According to Fidelity, Bitcoin is currently less volatile than 33 of the companies in the S&P 500, and has been less volatile than 92 of these companies up until October 2023, when using 90-day realized volatility data. 

Bitcoin: less volatile than Netflix, but still sensitive to capital movements

In the last two years, Bitcoin has shown less volatility compared to Netflix (NFLX) and, when compared to the so-called “magnificent seven”, a group of high-performing stocks, the volatility of Bitcoin does not appear anomalous.

However, Fidelity has emphasized that, as is the case for all emerging asset classes with a small market capitalization, Bitcoin could continue to experience episodes of high volatility due to new capital inflows. 

The forecast is that, with the maturation of the cryptocurrency and the increase in its market capitalization, these effects will be mitigated, as new capital will be distributed on a broader basis.

The expected approval of Bitcoin spot exchange-traded funds (ETFs) in the United States in January and the resulting inflows could further reduce the volatility of the cryptocurrency. 

However, Bitcoin has experienced a decrease of over 16% in the last month. The report noted that, as Bitcoin consolidates, new capital inflows will also have a smaller impact on price movements.

Fidelity and other Bitcoin ETFs record significant outflows

Fidelity’s Bitcoin spot ETF recently recorded net outflows of $22.61 million, marking the first day with net withdrawals since the fund was launched in January. 

Other US cryptocurrency funds have reported daily outflows totaling $217.58 million.

Specifically, Grayscale saw $139.37 million leave its converted ETF, while Ark Invest and 21Shares recorded withdrawals of $31.34 million. 

Valkyrie had an overall outflow of 20.16 million dollars and Bitwise lost 6 million dollars. The only fund that saw net inflows, with 1.87 million dollars, was Franklin Templeton’s EZBC. 

The 71-day positive flow of BlackRock’s IBIT fund was interrupted on Thursday, although, according to James Seyffart of Bloomberg, zero flows are a common situation.

The research by Hong Song-uk, analyst at NH Investment and Securities, found that fund inflows into Bitcoin were almost non-existent after the cryptocurrency’s halving. 

Investors in Grayscale Bitcoin Trust (GBTC) have maintained a rather negative view for a long period. According to Eric Balchunas of Bloomberg, the 72-day period of constant outflows is the longest in the history of global ETF funds. 

Uncertainty and high fees could be the reasons behind GBTC’s difficulties compared to its competitors.

Alessia Pannone
Alessia Pannone
Graduated in communication sciences, currently student of the master's degree course in publishing and writing. Writer of articles from an SEO perspective, with care for indexing in search engines.