According to a report by Ecoinometrics, 2023 marks a significant change in Bitcoin’s volatility pattern. Specifically, unlike the previous decade, Bitcoin has exhibited an unprecedented level of stability this year, with continuous volatility ranging from 20% to 40%. Additionally, its performance has seen substantial growth, yielding over 110% in profits since the beginning of the year.
Notably, Bitcoin recently reached its highest level of the year, touching $36,000 before correcting to around $34,600 at the time of writing.
The reduction in Bitcoin’s volatility mentioned in the report encompasses both realized and implied volatility:
1. Realized Volatility: This indicator measures the actual price changes and has shown a consistent decline.
2. Implied Volatility: This metric predicts market unpredictability in the future and has also decreased.
This exceptional stability, combined with stable performance, has led to a higher Sharpe Ratio for Bitcoin. The Sharpe Ratio is a risk-adjusted performance measure that signals superior returns for each unit of risk investors have to endure.
In essence, Bitcoin investors in 2023 are poised to achieve higher returns, maximizing their investment profits while experiencing significantly less volatility compared to previous years.