Bitcoin doesn’t have the exclusive on volatility
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.
- Bitcoin weekly price analysis 28 August: Token’s value soars in face of ETF rejections
- Most global companies are slow to adopt blockchain technology: PwC survey
- Leading universities are offering a growing number of crypto courses: Coinbase
- Cryptocurrency: Value-making coins vs value-giving coins
- EOS weekly price analysis 27 August: Coin’s value jumps due to US$1 million whale