BTC/USD: A new historical peak, followed by a 10% plunge

The volatility of Bitcoin remains unchanged despite the fact that its adoption rate is increasing day by day. More and more public companies are announcing investments in "digital gold", and those that invested early are also strengthening their position.

In the first week of March, MicroStrategy, a US software company that converted its cash into Bitcoin, announced a new cash purchase of 205 Bitcoins at an average price of $48,888. In total, the company now holds 91,064 Bitcoins, and its total investment exceeds $2.2 billion, at an average price of $24,119.

Tesla announced a $1.5 billion investment in February, Square another $150 million, and the list goes on, as institutional investors have also expressed interest. However, despite increased adoption, its volatility remains the same. Recently, Bitcoin's market capitalisation exceeded $1 trillion. One would think that volatility would decrease after this exponential rise, but this is not the case. Is it simply a gambling game destined to remain volatile despite the influx of more players?

Bitcoin's milestones over the years

To get a clearer picture of Bitcoin's volatility, it may be helpful to look at the price history. For example, it took Bitcoin 1,269 days to go from $1,000 to $2,000, seven days to go from $8,000 to $9,000, and less than a day to go from $59,000 to $60,000. Such a statistic is useful because it shows historical prices and market activity in hindsight. However, it only shows one side of the story - the upside, and therefore has a bias.

Last weekend, as is often the case with cryptos, the BTC price hit a new all-time high at $60,000. It quickly dropped 10% in less than 24 hours, a move you won't see on a stat like the one above, but that doesn't mean it didn't happen.

As an investor, such a drop is devastating to a portfolio. It proves that volatility remains high even as the price rises and investors flock to it. Yet it also shows something that every Bitcoin holder fears. Indeed, with every sharp drop of 10% or more in a day, every trader hopes that a strong hand will buy - a Tesla, a Square, a MicroStrategy, etc. So far, this has been the case, but the high levels of volatility indicate that larger declines are not only possible but likely.