Matt Hougan, Chief Investment Officer at Bitwise, stated that Bitcoin is evolving into a store of value, citing a decline in annualized volatility. Data shows that volatility dropped from 66% over the past decade to 44% during the last year.
In a recent commentary, Hougan noted that Bitcoin traded between $58,000 and $126,000 over the previous year, with a price of approximately $85,000 at the time of publication. The asset has historically risen from under $1.
The analysis compares Bitcoin to the Nasdaq-100 index, which currently exhibits volatility in the mid-20% range. Hougan suggests that Bitcoin's volatility could eventually fall below this level, though he characterizes this as a projection rather than a certainty.
Hougan attributes the stabilization to increased market participation rather than a loss of interest. He explains that as more institutional investors enter the market, individual trades have less impact on price, leading to smoother fluctuations.
For institutional allocators, the downward trend in volatility is a critical factor for portfolio management. Lower volatility allows for larger position sizing within standard risk budgets, potentially increasing the asset's role in institutional portfolios.
