Bitcoin (BTC) has long been synonymous with major price swings, drawing in retail and institutional investors with its high risk and even higher rewards appeal, according to an analysis shared by digital assets investors Anthony Pompliano.
For retail investors, the allure was buying low before an anticipated rise.
For sophisticated players, Bitcoin’s volatility offered an asymmetric bet with significant risk-reward potential.
But what happens when the rollercoaster slows down?
According to recent market trends, we may be finding out.
Over the past two years, Bitcoin’s volatility has been steadily declining, a shift that has sparked intense debate among analysts and investors.
Bloomberg’s Eric Balchunas recently highlighted this trend, noting that since the launch of Bitcoin exchange-traded funds (ETFs), the asset’s 90-day rolling volatility has dropped below 40 for the first time—down from over 60 at the time of the ETFs’ debut.
For context, Bitcoin’s volatility is now less than twice that of gold, a far cry from its historical three-times multiple.
This taming of Bitcoin’s wild swings has led to speculation about whether its days of parabolic bull markets and gut-wrenching bear markets are behind it.
Analyst Mitchell Askew argues that Bitcoin has fundamentally changed since the introduction of ETFs.
He predicts a future where Bitcoin steadily climbs to $1,000,000 over the next decade through a pattern of “pump and consolidate” cycles.
This gradual ascent, he suggests, will lack the dramatic spikes and crashes that once defined the asset, potentially boring speculative “tourists” out of their positions.
Balchunas echoes this sentiment, pointing out that Bitcoin has risen approximately 250% since BlackRock’s ETF filing, with significantly reduced volatility and no “vomit-inducing drawdowns.”
This newfound stability, he argues, has attracted larger institutional players and bolstered Bitcoin’s case as a viable currency.
However, he acknowledges a trade-off: the era of “God Candles”—massive, sudden price surges—may be over.
Not everyone is convinced that Bitcoin’s volatility is gone for good.
Joe Burnett of Semler Scientific offers a different perspective, drawing parallels to the period before Bitcoin’s 2017 parabolic bull run.
Back then, volatility was also declining while prices ticked upward, setting the stage for an explosive breakout.
Burnett suggests that Bitcoin may still be in the early stages of global adoption, with governments, S&P 500 companies, and institutional portfolios holding negligible amounts of the asset.
If this is the case, the current low-volatility grind could be the calm before another storm of upward volatility, reminiscent of 2017’s meteoric rise.
The truth, as Anthony Pompliano, Founder and CEO of Professional Capital Management, notes, is that no one can predict Bitcoin’s next move with certainty.
While the asset has a history of defying expectations—often becoming volatile just when complacency sets in—its long-term trajectory may indeed involve less volatility.
As Bitcoin grows in market size and attracts more traditional finance investors, it is transitioning from a contrarian bet to a consensus trade.
This maturation could naturally compress its volatility over time, aligning it more closely with traditional assets like gold.
Yet, volatility remains a cornerstone of Bitcoin’s appeal.
It fuels the emotions of greed and fear, creating opportunities for savvy investors and serving as a powerful marketing tool for the asset.
Arguably, Bitcoin without volatility would lose some of its appeal, potentially dampening the speculative fervor that has driven its adoption.
Pompliano hopes that the “market gods” will grant a few more years of maximum volatility, keeping Bitcoin’s so-called wild spirit alive.
As the crypto space evolves, Bitcoin’s journey is seemingly far from over.
Whether it continues its slow grind upward or explodes into another parabolic run, its ability to captivate investors remains notable.