Declining Bitcoin Volatility Has Plenty of Benefits

For much of its nearly 17 years on the market, bitcoin has been viewed as a volatile asset. The largest cryptocurrency’s history is chock full of dramatic price swings in both directions and extended periods of turbulence.

However, that condition isn’t a permanent affliction. In fact, bitcoin volatility is waning. And that could be good news for spot prices and ETFs like the Coinshares Valkyrie Bitcoin Fund (BRRR). Whether it’s by way of direct ownership or via an ETF like BRRR, investors would love to take the bumps out of their bitcoin rides. The digital currency is obliging.

“The largest cryptocurrency’s three- and six-month rolling volatility, meaning the speed and extent of its price changes over those time periods, has fallen to a historically low level. This trend has continued even as bitcoin’s price set new record highs in May, July, and August,” reported David Hollerith for Yahoo Finance.

Why Lower Bitcoin Volatility Matters

When bitcoin was younger, it wasn’t just retail investors that were chastened by the digital currency’s wild swings. Many professional money managers simply stayed away. That was because bitcoin’s price swings far exceeded those of other asset classes. However, a new era is dawning and it could be to the benefit of HOLDers and BRRR investors.

“However, the range of its swings has been [narrowing. And] a key factor has been the launch of new bitcoin-related financial products like futures contracts and exchange-traded funds that have brought in more investor groups,” added Yahoo Finance.

That’s not just talk. There are real-time examples of more institutions embracing bitcoin, and those instances are increasingly frequent. On Wednesday, U.S. Bank said it will again offer cryptocurrency custody services for professional investors, four years after it originally entered the space.

“Following greater regulatory clarity, we’ve expanded our offering to include bitcoin ETFs, which allows us to provide full-service solutions for managers seeking custody and administration services,” said Stephen Philipson, vice chairman of U.S. Bank Wealth, Corporate, Commercial and Institutional Banking, in a statement.

In what could be another positive sign for BRRR, bitcoin’s volatility remains near notably low levels despite an August slump. That slump is widely expected in some corners of the cryptomarket. Looking out over the near term, investors probably shouldn’t expect that bitcoin volatility will resemble that of consumer staples or utilities stocks. But calmer waters are useful in bringing more investors into the space, and that could benefit BRRR.

For more news, information, and strategy, visit the CoinShares Crypto ETF Hub.