Cryptocurrencies are one of the most substantially volatile investments in the world. The investment in Bitcoin (BTC) and other digital currencies has the potential to generate big profits for investors but the risk of losing the entire investment is equally high.These currencies have the history of making volatile upside and downside movements – they can add or erase billions of dollars in few hours alone.
Based on reports from fund managers, virtual currencies are numerous times volatile and riskier than stocks and other securities during the financial crisis of 2008-09.
Richard Turnill, BlackRock global chief investment strategist, said, “The volatility of the cryptocurrencies makes the gyrations in the U.S. equity market during the global financial crisis almost look placid”.
BlackRock Analysis Prove Bitcoin Is Substantially Volatile
Bitcoin price increased substantially in the second half of last year; the coin peaked around $19,000 at the end of the previous year before fumbling back to $6,000 in the next one month alone. Since then, Bitcoin price continues to make a volatile sideways movement, as traders are unsure about the future of this coin.
According to BlackRock’s analysis, bitcoin got the score of 70% based on annualized daily realized volatility, compared to the volatility score of 30% for U.S. stocks during the 2008-2009 financial crisis.
Ethereum (ETH) and Ripple (XRP) are more volatile assets than Bitcoin based on BlackRock’s analysis. Ethereum’s volatility score stands around 150%, while Ripple’s volatility score exceeds 180%.
Investment Community has Mixed Opinion
Though few analysts are predicting a sustainable rally in bitcoin price throughout fiscal 2018; they deem regulators interference a constructive footstep for the long-term sustainability of digital currencies. On the other hand, large fund managers believe virtual currencies could have a bad ending, and the prices will fall to zero. Overall, the future fundamentals of cryptocurrencies are entirely dependent on the decision from U.S., European and major Asian regulators.
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