Bitcoin doesn’t have the exclusive on volatility

Posted: 8 February 2018 3:17 pm

Volatility has rocked both bitcoin and stocks lately

On the heels of the bitcoin crash, stocks also just hit some noteworthy turbulence.

Despite the steady pace of the bull market in stocks over the past year, this week aptly illustrated that bitcoin isn’t the only market capable of tremendous volatility.

The stock market seemingly lulled investors into record bets on low volatility, but this week’s dramatic pullback awakened everyone from that slumber. Bloomberg reported that a handful of financial instruments tied to the market’s measure of volatility plummeted from $3.7 billion on Jan. 31 to a mere $525 million on Tuesday, a fall of 86%. Some of the biggest exchange-traded products in question were the VelocityShares XIV and the Proshares SVXY.

Volatility itself, as measured by the Chicago Board Options Exchange’s VIX, spiked higher than it’s been since 2015.

So far, the actual markets haven’t fared nearly as bad, with the S&P 500 dropping just 6% and the Dow Jones Industrial Average falling 7% over the first five days of February.

In comparison, bitcoin fell from its December 17 high of almost 19,800 to as little as 6,000 on Tuesday, a crash just shy of 70%. Of course, that’s not the first time the cryptocurrency has plummeted. And history shows the Dow Jones crashed more than 50% over 17 months from 2007 to 2009, and the NASDAQ plummeted 78% over 30 months during the dot-com crash of the early 2000s.

So while the timeframe of bitcoin’s fall is certainly condensed compared to past crashes in the stock market, the digital token is not alone in experiencing volatile swings from one extreme to another.

In related news, the U.S. Senate recently took up the topic of bitcoin and cryptocurrency in general during a hearing with regulatory leaders. Read more analysis of the hearing, as well as other breaking news reports, on our Crypto Finder news hub. And learn much more about bitcoin, blockchain technology and the rise of other cryptocurrencies in our comprehensive guide to the subject.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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