Bitcoin Compared to the Stock Market
Bitcoin for a long time now has been considered too volatile for large investment. Today, the world has slowly shifted to accepting Bitcoin. Countries and large corporations are slowly accepting Bitcoin as a currency and a form of investment. Yet progress is slow and has only be pushed by strong crypto believers and in time of emergency like Ukraine accepting Bitcoin for donation.
Look at this graph. Think which one is Bitcoin and which one is Tesla. What is currently one of the heaviest cap weighted stocks in the market and what is a cryptocurrency that has been considered too volatile for investment. By just looking at this image without knowledge of which is which, it is almost impossible to tell the difference between Tesla and Bitcoin. So what is wrong? Is it fear of something different. Why is Bitcoin incredibly risky and Tesla isn't?
Bitcoin is in the white and Tesla is the light blue (sorry had to make it match my logo). Did you guess right? Well you had a 50/50 chance, so by luck or by searching a specific date, or just simply scrolling down you might have gotten the right answer. Yet if I removed the dates, the legend, and just showed lines on a graph the differences between Tesla and Bitcoin's volatility become blurred.
Even when you compare Bitcoin to the S&P 500, Google, and Tesla. Bitcoin does necessarily stand out except for three distinct points: January 21st, February 4th, and February 28th. Those are three dates in which Bitcoin moved more than 10% in one day. Note that Bitcoin trades 24-hours a day, 7 days a week, giving it more time to move creating higher volatility. Even with it's longer trading period it kept inline with Google's and Tesla's biggest leaps both going over 10% and under 10% in one trading session. Again, if a stable, blue chip stock like Google can move 10% in a day what is the fear behind Bitcoin. My answer is fear of the unknown. Which I actually understand. Cryptocurrencies are terrifying, it the Wild West but instead of being fearful why do not people get excited. Get pumped, we living in a period of time in which their is a whole new world of possibilities.
This is short article just to highlight the fact that Bitcoin's volatility is not that scary is quite common in the new age of the stock market. Bitcoin is just a more liquid asset!
Happy trading!
- finalfantasy