WallStreet Stocks Vs Bitcoin ( Crypto´s ) : A world of volatility , Uncertainty and risks
Even though cryptocurrencies are not fraught with governmental and institutional regulations as the case with wall street, it is argued that stocks are more volatile and risky than cryptocurrencies - if you consider the big picture. since its inception, investors have seen more ROI in crypto space compared to wall street even though wall street is more volatile and have big institutional investors.
According to an article in Fortune.com Bitcoin Is Less Volatile Than Stock Market Volatility Index, SEC Chair Says.
Conversely, however ,
A report last week from Citi’s private banking division referred to cryptocurrencies as “the most volatile asset class”—far more volatile than S&P 500 stocks or gold, which for months had largely been humming along, reacting surprisingly little to major news events.
Is the above statement true or another fud from cryptcurrencies haters aka banks and government institutions? I think so because we all have seen even more volatility and loss of ROI from wall street almost every year. Below statement analyzed my assertion about the above report from Citi private banking:
But that all changed this week, SEC chairman Jay Clayton noted in Tuesday’s Senate banking committee hearing. When the Dow swooned 4.6% Monday, it spurred an even more extreme move in the so-called Wall Street fear gauge: the CBOE Volatility Index, also known as the VIX, spiked nearly 116% that day, then rose as much as another 37% Tuesday to its highest point in years—only to end the day down almost 20%. It was the widest swing in the history of the VIX, according to the Wall Street Journal’s market data group. Given that backdrop, the regulators at the Senate hearing downplayed lawmakers’ concerns over Bitcoin’s “extreme price volatility.”
“Just recently the volatility in Bitcoin was not as great as the volatility we’ve seen in other securities, such as the VIX product,” Clayton retorted.
Conclusion: Volatility (high Beta) leads to supernormal profits (and loss too) and I see that a lot in the crypto space and most recently, in wall street too-hence the need for some corrections. However, in terms of investing, I prefer cryptocurrencies because you can start with almost no money (steemit ) and be successful if you work smart.
What do you think? send in your comments, resteem and upvote to send in your support.
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To make supernormal profits , volatility is needed which relates to risks. In this context, you referred about riskiness / Beta which is a big factor too. Thanks for sharing
Well said.
Bitcoin's ties to the performance of U.S. stocks appears to be increasing.
On a 90-day basis, the correlation between the daily percent returns of the cryptocurrency and the S&P 500 is 33 percent, the highest since the cryptocurrency started gaining public attention in January 2016, according to Nick Colas, co-founder of DataTrek Research.
The previous high of the last two years was much lower, at 19 percent, in mid-December 2017, Colas said in a Thursday note. The long-run average for the 90-day correlation is negative 1 percent, his analysis showed.Bitcoin soared 2,000 percent in the 12 months through December to well above $19,000, helped by a surge of investor interest and speculation about increased attention from institutions.
Good point, I agree. Good one indeed.
I think it is easy to see that the S&P volatility over the past few years has been extremely low, based on historical average. The constant pumping of money due to artificially low interest rates has created many bubbles. The search for yield will eventually end up with a lot of significant damage across the investment spectrum.
The minute rigging stops, the 401Ks, pension funds, bond holders, REITs and many others will be a world of hurt. I hope cryptos stay uncorrelated and even inversely correlated to the legacy investment world.
i think all stocks and crypto are risky places to put money, but almost anything can be (business ventures, real estate, etc). i think the key difference in level of heightened volatility is different in crypto. for example, if you buy high and then suffer a drop- it can be a BIG drop. people that bought in under $1000 i don't think are sweating at all. and people that bought in under $100 are just on cruise control vacation.
its all relative to the price you bought in, then volatility can affect you more.
Hahahah I like your comment...good point indeed. I guess that you are on cruise vacation?
haha - i wouldve been on my own private jet vacation had i bought in when i first was poking around during my grad school days. but i still faired well;p
just read you were at MIT Sloan - nice!! I did my masters at MIT as well - Course 4, meaning I spent a lot of time at the Media Lab. collaborated with quite a few sloanies back in the day on ventures courses at the media lab :)
such a small (steemit) world!
Wow a small steemian world indeed. I was wondering if you are good in apps and blockchain dev? or you know someone? Following you now to stay in touch.
I've dabbled in front end dev, but I'm a designer for the most part (UX/UI and experience design). mobile, web, AR/VR, 2D/3D, and recently into decentralized platforms and dapps. working on some fun projects - including working with a decentralized engineering organization that is developing tech for the hyperloop - its exciting stuff! happy to talk more in detail - and always great to connect with a fellow MIT grad :)
Great, steemit chat? Charles1
No bot!!!!
The question hinges upon an ambiguity in the term "volatility." It's a statistical concept: gains are counted as "volatility" just as much as losses.
The rationale for this approach is that huge gains tend to be accompanied by huge losses, so a big gainer should be marked as "volatile" as well as a huge loser.
The flaw in the concept is well known. That's why the Wall Street quants focus on "alpha:" the gain net of volatility.
I don't have the figures, but Bitcoin is clearly high-beta and high-alpha!
Well analysed. However in this context, the author based his argument on volatility in relation to risk according to the cited article. Good point in regard to relationship between high gains and volatility, upped from a little lady
A very good comment indeed, thanks a lot!!!
Glad to!
In fact I'm getting interested...
Absoluetly bud...always on point!!!
There is no doubt that Crypto has been more volatile than equities the last few years. Hell, the stock market had almost no volatility the last two years....when you think about it, bonds were more volatile.
Will it keep going? Who know...the market has been enjoying huge swings. Ironically, cryptos are relatively flat in comparison.
I think the crypto world will settle down a bit when more money enters the space.
Good point, lets keep our fingers crossed
Nice man, yeah I touched on this a bit yesterday when talking about the 200 day MA and how far away the S&P 500 got from it....you just knew there was some downside volatility coming, same as we saw with BTC.
In the end, crypto is still more volatile and it should be. It is a newer investment and asset class. Eventually the volatility will shrink to a point where it is not much different than stocks on a whole.
Very good point indeed, thanks for your comment
Every business that contains a juicy profit has a high potential for risk, which invests in these types of business knows the risk that runs in doing so. what people should be aware when it comes to living is that they should invest only what they can afford to lose, never invest all our capital in these negotiations, maybe because they want to make a lot of money, they are finally ruined
Excellent post dear friend @ charles1
I wish you a good weekend
Correct!!! thanks for your comment
Both stock and cryptocurrency are volatile, but I prefer to invest in cryptocurrency than stock because it easier to make more money in crypto than stock. Nice work as usual.
Good point...I agree
Good post with great timing.
It's been a heinie hurt situation all the way around this past week but just a blip in the scheme of things.
Thank you for your effort to write this nice post :)
It's very factful and written for to easy understand.