Is Bitcoin less volatile than FIAT?

Bitcoin, more often than not, has been criticized because of the volatility in its price. However, a statistic that has come to light suggests a different story.

Surprisingly, the 30-Day volatility in the currencies as mentioned above is more significant than Bitcoin by a mean of 2.86%. Therefore, not only has Bitcoin become more stable but it is performing better than most other FIAT currencies of the world as well.

However, this may be calm before the storm.

Do you remember the Federal Reserve Bank CEO, John Williams saying that: "volatility makes them [Bitcoin and other cryptocurrencies] an unstable store of value and hampers their ability to be used as reliable payments for goods and services"

Statistics, on the other hand, show that over the past year, stability in BTC has been noticeable. Digital cryptocurrency works even better than most FIAT world currencies when it comes to price volatility.

What Bitcoin volatility index hints us at

First of all, let's find out how the volatility index is properly calculated.

When market volatility increases dramatically, financial sites, bloggers, social networks, newspapers and television commentators refer to the VIX. Formally known as the CBOE Volatility Index, the VIX is a benchmark index designed specifically to track the volatility of the S & P 500. Most investors familiar with the VIX are usually referred to as the “fear indicator” because it has become an indicator of market volatility.

The VIX was created by the Chicago Stock Options Exchange (CBOE), which positions itself as the “largest stock options exchange in the USA and the creator of these options”. The CBOE operates a commercial business, selling (among other things) investments to sophisticated investors. These include hedge funds, professional money managers and private individuals who make investments, seeking to profit from market volatility. To facilitate and encourage these investments, CBOE developed the VIX, which tracks real-time market volatility.

Although the mathematics underlying the calculation and the accompanying explanation occupy most of the 15-page document published by the CBOE, we will present the main points in the review. As my professor of statistics once said: “It’s not so important that you can complete the calculation. Rather, I want you to be familiar with this concept. ” Remembering that he taught statistics in a room full of people who were not mathematicians, let's take a look at the calculations behind the VIX, a layman, by kindly providing examples and information. courtesy of CBOE.

This is the formula for calculating volatility as provided by CBOE

Luckily the aggregation financial websites have made it easier for us to analyze the volatility of the currencies by presenting the reader with the complete data.

Below is the table of VIX of most of the world's major currencies against USD, as derived from RateSFX

And the following graph is the volatility index of Bitcoin, as presented by CoinMarketCap.

And of course, here's what Weiss Ratings has to say about this historical perspective.

Thank you for your time and enjoy your fee-free trading at the exchange with one of the most competitive exchange rates in the market, VHCEx!