The indicator fluctuated significantly over the years, but in general showed a clear downward trend over this period. From 179% in January 2012, it dropped to 45% at the beginning of this year.
A higher indicator means significant price volatility and signals a greater unpredictability of the market. Low metric values imply much more stable trading conditions.
In mid-January, in Peter McCormack's What Bitcoin Did podcast, Galaxy Digital head of research Alex Thorne and Bloomberg stock analyst James Seyffart suggested that the launch of spot bitcoin ETFs in the United States would further smooth out price fluctuations.
Changes in asset prices will lead to the need to rebalance investments so that the target share remains unchanged, the expert noted. For example, with bitcoin growing by 80% and a fixed percentage in the portfolio of 5% of the total volume, the consultant is likely to sell the cryptocurrency to maintain the ratio.
If there is a significant drop, on the contrary, the asset will be bought up to maintain the target value, Seyffart said.