Finance Expert Explains Why Bitcoin is Becoming Less Volatile than Stocks

Bitcoin is reportedly becoming less volatile than stocks. What could be causing this and what does all this have to do with whales and the future of finance? This finance expert weighs in.

“The valuation of Bitcoin as a security is controlled by “whales”, that is, investors who hold a lot of it, more than many other financial securities in the world. So its valuations are always far more distorted as a result. Even if some reports say that bitcoin valuations will become more stable, it will be driven by those same “whales”, so it tells us nothing about the liquidity or other factors that might be involved,” says finance expert Emmanuel Daniel.

The drama being played out right now is that traditional securities are also going through an unprecedented period of volatility right now. The regulators who are worried about the impact of investing in cryptos for retail investors should rightfully be concerned about retirement accounts being decimated by the stock market. 

Daniel goes on to say that, “The question on the volatility of cryptocurrencies currently is how can we reasonably expect to see it played out. Firstly, we are seeing the broadening of the investor base for cryptos. The less valuable it becomes the less the incentive to hoard crypto and only true believers and technology geeks will appreciate the utility of cryptos to want to accumulate it. Secondly, the more the utility of cryptos increases, I believe that the valuation will decrease because holders would want to circulate it more in order to generate income. We see this in decentralized finance. Cryptocurrencies as an investment token and cryptos as a utility token are driven by two different dynamics. As an investment, they are subject to the same forces as all other securities in the market’s economy. As utility tokens, they are subject to the laws of the network economy which is only just taking shape. I will not be surprised that as cryptos become a part of our everyday lives, their face value will be replaced by their “volatility”. In other words, their value shifts to their ability to circulate in the economy and investors generate returns through trading or lending on them actively. For now, just know that the fall in the value of cryptos is not at all an indication of their increasing utility.”

Emmanuel Daniel is a global thought leader in the future of finance and is listed as a top 10 global influencer in the “Fintech Power50” list for 2021 and 2022. He is also a global entrepreneur, the founder of platforms such as The Asian Banker and Wealth and Society, through which Daniel has had extensive contact with leaders in banking and finance around the world. His new book, “The Great Transition: The Personalization of Finance is Here,” has already received rave reviews from the US House of Representatives and Chairman, House Financial Services Committee, Barney Frank, and retired Chairman and CEO of Wells Fargo, Dick Kovacevich.