Bitcoin's volatility has decreased to 35, a significant drop from its 2017 peak of 120, indicating increased institutional maturity. Trace Mayer, creator of the Mayer Multiple, attributes this decline to the growing economic substance of Bitcoin and disciplined capital inflows. Mayer highlights the role of the options market, where companies sell covered calls to earn premium income, leading to a structural ceiling on price spikes and reduced volatility.
The Mayer Multiple, which compares Bitcoin's current price to its 200-day moving average, currently stands at 0.94, suggesting Bitcoin trades just below its long-term trend. Mayer notes that as Bitcoin attracts deeper capital, its volatility decreases, making it a more predictable asset. He argues that lower volatility positions Bitcoin as a viable reserve asset for investment committees and corporations, akin to gold. Despite potential risks like quantum computing, Mayer remains optimistic about Bitcoin's future as a stable reserve asset with a fixed supply.
Bitcoin Volatility Declines as Institutional Adoption Grows
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