What is The Bitcoin Volatility Index?
This site tracks the volatility of the Bitcoin price in US dollars.
What is volatility?
Volatility is a measure of how much the price of a financial asset varies over time.
Why is volatility important?
Volatility means that an asset is risky to hold—on any given day, its value may go up or down substantially. The more volatile an asset, the more people will want to limit their exposure to it, either by simply not holding it or by hedging. Volatility also increases the cost of hedging, which is a major contributor to the price of merchant services. If Bitcoin volatility decreases, the cost of converting into and out of Bitcoin will decrease as well.
What definition of volatility does The Bitcoin Volatility Index use?
The standard deviation of daily returns for the preceding 30- and 60-day windows. These are measures of historical volatility based on past Bitcoin prices. When the Bitcoin options market matures, it will be possible to calculate Bitcoin's implied volatility, which is in many ways a better measure.
How volatile is Bitcoin relative to gold and other currencies?
For comparison, the volatility of gold averages around 1.2%, while other major currencies average between 0.5% and 1.0%.
The chart above shows the volatility of gold and several other currencies against the US Dollar. Series marked with an asterisk are not directly comparable to series not so marked because fiat currency markets are closed on weekends and holidays, and therefore some price changes reflect multiple-day changes. Such multi-day changes in price are excluded from analysis, and therefore, the 30- and 60-day metrics for these series use fewer than 30 and 60 data points. They are presented for entertainment purposes only.
What is the pricing source?
The Bitcoin Volatility Index is powered by CoinDesk for Bitcoin prices, and by FRED® for other series pricing data.
Any other coins?
Yes, we have pages for Litecoin Volatility and Ethereum Volatility.