Bitcoin’s Realized Volatility Surpasses Ethereum’s For the First Time in a Year
According to reports, Kaiko data shows that Bitcoin\’s 30-day average realized volatility exceeds 60%, surpassing Ethereum for the first time in a year. Previous
According to reports, Kaiko data shows that Bitcoin’s 30-day average realized volatility exceeds 60%, surpassing Ethereum for the first time in a year. Previously, Ethereum’s 30-day average realized volatility has been higher than Bitcoin since February 2022.
Data: Bitcoin has achieved an average volatility of over 60% in 30 days, surpassing Ethereum for the first time in a year
Anyone who has been paying attention to the cryptocurrency market lately knows that it has been quite volatile. Recently, a report from Kaiko data has shown that Bitcoin’s 30-day average realized volatility has exceeded 60%, surpassing Ethereum for the first time in a year. Since February 2022, Ethereum’s 30-day average realized volatility has been higher than Bitcoin’s, but that is no longer the case. In this article, we will explore what realized volatility is, why it matters, and what this shift means for the market.
What Is Realized Volatility?
In simple terms, realized volatility is a measure of the volatility that has occurred over a given period. It is calculated by taking the square root of the sum of the squared deviations from the mean of the logarithmic returns, multiplied by the number of periods over which the returns are measured. It is an important factor in determining the risk of an investment.
Realized volatility is different from implied volatility, which is a measure of what the market expects the volatility to be in the future. Implied volatility is often used in options trading, while realized volatility is used by traders and investors to determine the risk of a particular asset.
Why Does Realized Volatility Matter?
Realized volatility matters because it gives investors and traders an idea of how much the value of an asset is likely to fluctuate in a given period. The higher the realized volatility, the more risk there is associated with owning that asset. This is important for traders who want to buy and sell an asset at the right time to maximize profits.
For long-term investors, realized volatility can help them assess whether an asset’s returns are worth the risk. If an asset has a high realized volatility, but its returns are also high, it may be worth the risk. However, if the returns are not high enough to justify the risk, it may not be a good investment.
What Does Bitcoin’s Higher Realized Volatility Mean?
Bitcoin’s higher realized volatility means that it is currently a riskier investment than Ethereum. This shift may be due to a variety of factors, including the recent Tesla announcement that it will no longer accept Bitcoin as payment and China’s crackdown on cryptocurrency mining.
While Bitcoin’s realized volatility has increased, Ethereum’s has remained relatively stable. This could be due to Ethereum’s increasing use in decentralized finance (DeFi) and non-fungible tokens (NFTs), which are seen as more innovative than Bitcoin’s use case as digital gold.
Conclusion
Bitcoin’s higher realized volatility is a significant shift in the cryptocurrency market. While realized volatility is not a perfect predictor of an asset’s future returns, it is an important factor to consider when making investment decisions. For traders, it means that Bitcoin may be a good asset to trade due to its increased volatility. For long-term investors, it means that careful consideration is needed to determine whether Bitcoin’s risk is worth the potential returns.
FAQs
Q: What is the difference between realized volatility and implied volatility?
A: Realized volatility is a measure of the volatility that has occurred over a given period, while implied volatility is a measure of what the market expects the volatility to be in the future.
Q: Why is realized volatility important?
A: Realized volatility gives investors and traders an idea of how much the value of an asset is likely to fluctuate in a given period. This is important for determining the risk of an investment.
Q: What does Bitcoin’s higher realized volatility mean?
A: Bitcoin’s higher realized volatility means that it is currently a riskier investment than Ethereum. This shift may be due to various factors, including recent announcements from Tesla and China.
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