Bitcoin is not volatile

Skepticism toward the idea of saving in bitcoin is common, and not entirely unjustified. Bitcoin has fallen more than 75% from its all-time highs multiple times, and its price can swing by double-digit percentages in a single day. When it comes to savings reserved for short-term needs like bills or rent, that kind of volatility is a real problem.

But the picture changes significantly when we focus on longer-term savings. While it's genuinely difficult to predict whether bitcoin's price will be higher or lower tomorrow, next week, or even next year, the data shows that uncertainty tends to dissipate over a span of several years. When viewing bitcoin's price as a smoother three-to-four year moving average, something striking emerges: bitcoin's average price has only ever moved in one direction, upward.

This holds true even without smoothing. No date in bitcoin's history can be found where the price wasn't higher four years later. If you bought at the peak before the crash in December 2017, a full recovery took three years, and after four years the price was 200% higher. If you bought at the peak before the crash in November 2021, a full recovery took a little more than two years, and after four years the price was 50% higher.

It's possible to analyze the full range of outcomes across all holding durations historically. With the tool below, you can investigate those outcomes alongside the results for holding gold, the S&P 500, and the dollar in the 21st century. The outcome is consistent: bitcoin has carried the most downside risk over shorter spans, and the least downside risk over longer ones.

The volatility that concerns savers is the kind that leaves the direction of value uncertain. Across bitcoin's 15-year price history, that kind of uncertainty simply disappears once bitcoin has been held for more than three years. The price has always been higher, and the only question is by how much, leaving little room for disappointment when the goal is simply to preserve value.