The materials on this website or any third-party websites accessed herein are not associated with and have not been reviewed or approved by: (i) Valkyrie Funds LLC dba CoinShares Valkyrie, its products, or the distributor of its products, or (ii) CoinShares Co., its products, or the marketing agent of its products.

Bitcoin's Volatility

One of Bitcoin's relational properties is volatility. Volatility refers to how much the exchange rate of bitcoin (BTC) fluctuates over a given measure of time. The driving factors of how this property changes, and in what magnitude, are based on its market depth and the volume of trades being made.

The more people adopt and use an asset, the deeper the market for that asset tends to become — more buyers and sellers become involved, and likely more professional market participants, too. This increased market depth generally leads to smaller price swings, by definition making the asset less volatile over time.

As it relates to bitcoin, this means that as its adoption grows, we would expect its volatility to decrease.

Over time, this has largely been the case, with bitcoin's volatility gradually decreasing as both the market for bitcoin has grown and more people choose to use and hold it.