Analysis: Bitcoin Volatility Has Fallen Since 2018, but 3-Sigma Price Swings Have Become More Frequent

Bitcoin's overall price volatility has fallen sharply to about 46% this year from 84% in 2018, but unusually large 3-sigma swings have become more frequent, rising to 10 instances from eight.
Experts said routine volatility has declined as institutional investors and exchange-traded funds (ETFs) entered the market and liquidity expanded, but macroeconomic shocks and crowded derivatives market positioning are still driving sudden sharp moves.
Luke Strijers warned that if investors increase their portfolio exposure on the assumption that normal volatility is low while relying on option-selling strategies and traditional value-at-risk (VaR) metrics, abrupt price swings could hit portfolios even harder.

Forecast Trend Report by Period

Bitcoin's overall price volatility has fallen sharply from past years, but unusually large swings are occurring more often.

CoinDesk reported on October 10 that Bitcoin has recorded 10 so-called 3-sigma moves this year, defined as price swings that exceeded three times its 30-day volatility. That is more than the eight such episodes recorded in 2018.

CoinDesk described a 3-sigma move as an unusual level of volatility that deviates sharply from Bitcoin's typical price action.

Analysis: Bitcoin Volatility Has Fallen Since 2018, but 3-Sigma Price Swings Have Become More Frequent

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