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Bitcoin Volatility Index (BVI)

By: Alexander Reed | Last updated: 2/21/24

Bitcoin is one of the more volatile assets you can invest in today. This post displays Bitcoin’s volatility index and how to measure it.

Bitcoin Volatility Index Summary

The Bitcoin volatility index measures how much Bitcoin’s price fluctuates on a specific day (relative to its price). The higher the volatility, the riskier the investment since it’s hard to predict what the price will do.

Bitcoin Volatility (measured by % of change)

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30-Day Estimate60-Day Estimate

last 30 day estimate


last 60 day estimate


That’s the Bitcoin volatility index in a nutshell. For a more detailed explanation about Bitcoin’s volatility keep on reading, here’s what I’ll cover:

  1. Is Bitcoin Volatile?
  2. Why is Bitcoin So Volatile?
  3. How to Calculate Bitcoin’s Volatility?
  4. Frequently Asked Questions
  5. Conclusion

1. Is Bitcoin Volatile?

Yes, Bitcoin is considered relatively volatile, but it really depends on what you compare it to. Bitcoin’s volatility is a measurement of how much Bitcoin’s price fluctuates, relative to the average price in a given time period.

Volatility measures past performance of price and is used to predict how likely it is that the price will change dramatically. The higher the volatility – the riskier the asset.

2. Why is Bitcoin so Volatile?

Usually, the smaller market cap an asset has, the more volatile it will be. Imagine throwing a rock into a small pond. Now take the same rock and throw it into the ocean. The rock will have much more effect on the pond than on the ocean.

In the same manner, Bitcoin (the small pond for now) is more volatile (i.e. affected) by everyday buy / sell orders (the rock).

Today, Bitcoin’s market cap is around $350 billion. In comparison, gold’s market cap is around $3 trillion (over 8x larger).

Market cap is calculated by multiplying the number of Bitcoins in circulation by the price of each Bitcoin.

Since the amount of Bitcoins in circulation is limited (21 million) and we’ve already reached 88% of the total amount, the major influence on Bitcoin’s market cap will be through price changes.

Once the price increases and brings the market cap to a higher level, price movements will become smaller.

In short, a higher price = higher market cap = lower volatility.

3. How to Calculate Bitcoin’s Volatility?

Volatility is measured by sampling how far away Bitcoin’s price goes from the price at a fixed point in time. In our case – Bitcoin’s opening price on a specific day.

Bitcoin’s daily volatility formula is actually the standard deviation of Bitcoin’s price.

The standard deviation is calculated as follows = √(Bitcoin’s price variance).

Bitcoin’s price variance is calculated as follows:

  • Sample Bitcoin’s price at different time points throughout the day – the number of samples is N
  • Calculate: (Bitcoin’s opening price – Price at N)^2
  • Sum up all the results = ∑(Bitcoin’s opening price – Price at N)^2
  • Divide the results by N = ∑(Bitcoin’s opening price – Price at N)^2 /N
  • This is the Bitcoin’s variance

Bitcoin’s daily volatility = Bitcoin’s standard deviation = √(∑(Bitcoin’s opening price – Price at N)^2 /N).

For a general timeframe volatility calculation, use the following formula:

√timeframe * √Bitcoin’s price variance

For example, the annualized volatility for Bitcoin would be √365 * Bitcoin’s daily volatility.

The monthly volatility would be √31 * Bitcoin’s daily volatility and so on.

What Units is Bitcoin’s Volatility Measured In?

In the example above we’ve used Bitcoin’s price to measure the standard deviation. Therefore, the volatility is measured in US dollars. If you want the volatility to be displayed in percent, you’ll need to recalculate the variance in percent using the following formula:

  • Sample Bitcoin’s price at different time points throughout the day – the number of samples is N
  • Calculate the deviation in percent: ((Bitcoin’s opening price – Price at N)/Bitcoin’s opening price*100)^2
  • Sum up all the results = ∑((Bitcoin’s opening price – Price at N)/Bitcoin’s opening price*100)^2
  • Divide the results by N = ∑((Bitcoin’s opening price – Price at N)/Bitcoin’s opening price*100)^2 / N
  • This is the variance as a percentage

The square root of the variance in percent will be the standard deviation, or volatility, as a percentage.

4. Frequently Asked Questions

What Affects the Price of Bitcoin?

Bitcoin’s price is affected by supply and demand. The more demand there is for Bitcoin, the higher people will be willing to pay for it – hence the price will go up.

If there’s no demand for Bitcoin, people will be willing to get rid of it for a lower price – hence the price goes down.

The term “Bitcoin Price” refers to the last price of a trade conducted on a specific exchange. Therefore, Bitcoin’s price on Bitstamp will be different than Bitcoin’s price on Coinbase, since both exchanges have different trades going on.

Usually the price differences between exchanges are minimal, however, in some cases a gap can develop, allowing for Bitcoin arbitrage opportunities.

5. Conclusion

Bitcoin is still considered an extremely volatile asset, which means that 5%-10% price changes on a single day aren’t uncommon.

Bitcoin’s high volatility makes it difficult for businesses to accept it as payment, and also makes it very nerve wracking for a lot of investors.

On the bright side, high volatility means that experienced traders can make a nice profit from trading Bitcoin. As Bitcoin matures and becomes more mainstream, its price will rise and its volatility will decrease accordingly.

Do you think Bitcoin will ever stop being volatile? Let me know in the comment section below.

Having delved into futures trading in the past, my intrigue in financial, economic, and political affairs eventually led me to a striking realization: the current debt-based fiat system is fundamentally flawed. This revelation prompted me to explore alternative avenues, including investments in gold and, since early 2013, Bitcoin. While not extensively tech-savvy, I've immersed myself in Bitcoin through dedicated study, persistent questioning, hands-on experience with ecommerce and marketing ventures, and my stint as a journalist. Writing has always been a passion of mine, and presently, I'm focused on crafting informative guides to shed light on the myriad advantages of Bitcoin, aiming to empower others to navigate the dynamic realm of digital currencies.

View all Posts by Alexander Reed

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6 comments on “Volatility”

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    I think people should always try to ask questions before critisizing or passing judgements….I’ve personally gained a lot from Mr Alexander’S earned a lot of bitcoins from the faucets and learnt a lot about bitcoin trading, purchase form the information he regularly dishes out to my email….Kudos …….I’m really thankful to God for coming across this website…GOD bLESS YOU……

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    1. Alexander Reed

      Hey Manuael,
      I’m not sure what you’re referring to but perhaps if you would calm down for a second and try to explain the issue in more detail I’d be able to help. Our site has been around for 3.5 years so I think if it was a scam you would know by now 🙂
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      1. Oh well put, that put the lid on his pot….lol. How on earth did this email slip through my system? Happy to have unearthed it. I trust you are well and very wealthy- good for you. By the way, do I still own .99 of a bitcoin🤷😁

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