Do you find it hard to believe? Because the data don’t lie!
The phrase in the title of this text is, unfortunately, the purest truth. Bitcoin is going through its most volatile moment since 2014, in an escalation that has lasted 6 years. The data to support this statement are from Blockforce Capital.
According to the responsible data indexer, Bitcoin reached 167.24% volatility on March 31, referring to a period of 30 days.
And it is just such volatility that currently separates Bitcoin from the idea of a value reserve. Highs and lows of 5%, 10%, up to 20% in short periods of time are common for the asset, and this is quite bad when it comes to value reserve.
Although gold has dropped 13% over the past month, this is nowhere near the 37% loss Bitcoin had on March 12. According explained Forbes, there was a strong correlation between the different groups of assets in the midst of the crisis:
“From early February to mid-March, the global stock, commodities, currencies and crypto markets suffered one of the most violent sales in history,” said Nicholas Pelecanos, chief operating officer at NEM Ventures.
“This highly correlated movement was caused by a massive liquidity crisis caused by investors selling shares due to the economic downturn of the Covid-19 virus,” he said.
Bitcoin as a store of value
As mentioned above, Bitcoin has been widely criticized for failing with a reserve of value in the current time of crisis. Some argue that other security assets also fell, but that still does not exempt BTC.
Falling almost 40% in 24 hours is quite problematic. It affects investor confidence and creates enormous uncertainty. To consolidate itself as a store of value, Bitcoin must first overcome its high volatility.
In this sense, with volatility under control, Bitcoin would be absolutely a sensational reserve, as it is scarce, free and basically unchachable.