JPMorgan Notes Drop in Three-Month Bitcoin Volatility

JPMorgan Chase & Co has released a new report noting a drop in Bitcoin volatility over the past three months. 

Bitcoin Volatility Drops Further, JPMorgan Says

Volatility has curbed the enthusiasm of many early crypto adopters who thought twice before venturing into Bitcoin once the currency started climbing rapidly and then took its ceremonial fall back to gut-wrenching amounts.

Now, though, JPMorgan Chase & Co. feels a little more certain that the stage may finally be setting for a future in which Bitcoin behaves less erratically, prompted by strong institutional trust in the currency and a better record of stability.

Yet, analyst Nikolaos Panigirtzoglou describes these signs as “tentative” but shares the opinion that “volatility normalization” is encouraging. “In our opinion, a potential normalization of Bitcoin volatility from here would likely help to reinvigorate the institutional interest going forward,” analysts for the investment bank said in a report emailed to Bloomberg. 

The three-month realized volatility for Bitcoin has fallen to 86% from 90% in February, and then again, the six-month average is 73%. While the percentage still seems rather large, JPMorgan exudes cautious optimism of what declining long-term volatility means.

There have been several force majors in the Bitcoin ecosystem to underpin a somewhat more reliable banking, though, including massive investments and endorsements from PayPal, MasterCard, and Tesla.

Institutional Investors Play Coy 

Institutional investors have been shy, but JPMorgan and Morgan Stanley are now preparing to enter the space and provide wealthy clients with opportunities to invest in cryptocurrency. Millionaires have already been buying varying degrees of crypto and add those assets to their portfolios. 

Then again, there is no small number of retail investors who may have propped up Bitcoin more so than any institutional backing. Another defining part in staying the cryptocurrency’s volatility has been the fact that vendors are increasingly extending purchases in crypto, not just for odd and marginal goods, but for mainstream things, too.

You can now order food or buy yourself a Tesla using Bitcoin. The currency has tripled its value since 2020, and it’s finding new investors. While most American banks are staying away from crypto, for now, Bank of New York Mellon Corp. has confirmed that it’s building a platform for both traditional and crypto assets. 

To move forward and further slash volatility, Bitcoin will need more institutional adoption, experts predict. The window of opportunity for institutional investors is definitely not shut yet.

Tesla managed to generate more from its $1.5 billion in Bitcoin within a few months than it did for an entire year of car sales back in 2020.