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Nick Szabo Shows How Bitcoin Capitalization Stabilizes As Volatility Decreases



Nick Szabo, the creator of Bit gold and recognized computer scientist, published a series of Tweets in which he shows Bitcoin (BTC) volatility and realized capitalization. The charts show that volatility in the cryptocurrency market has been falling during the last years and that its market capitalization has stabilized over time.

Volatility Falls And Capitalization Stabilizes
The cryptocurrency market has been expanding during the last years with Bitcoin (BTC) being the most popular and recognized digital asset in the space. Although there were other virtual currencies that appeared in the market, Bitcoin has always remained as the most valuable.

In a recent Tweet, Nick Szabo shared two charts that show Bitcoin’s 365-day volatility and its logarithmic realized capitalization. It is possible to see that over time, volatility has been falling, surpassing 9.5% in 2011 and reaching a low of almost 2.5% in early 2017. The highest point since the end of 2014 was in 2018 when Bitcoin fell from $20,000 to $6,000 in just a few weeks.

Since mid-2018, Bitcoin’s volatility has been falling until June this year. Almost three months ago, Bitcoin surpassed $10,000 for the first time in over a year. At the same time, Bitcoin surpassed $13,750 in different exchanges and was traded in a descending triangle with falling volatility since then.

Meanwhile, the second chart shows that as volatility fell, the realized market capitalization of Bitcoin grew. The longest period of stability for Bitcoin’s realized capitalization happened between 2015 and early 2018.

The charts show that there seems to be a negative correlation between realized cap and volatility. As volatility fell over the years, the market valuation for Bitcoin grew. This rule does not apply to movements in which volatility increases and the price of the most popular asset also moved upward. Bitcoin’s valuation increased when there was a very pronounced bull market followed by a sudden crash to higher lows.

In another tweet, Szabo explained about these charts:

“The long-term chart reflects the superior deep safety, global seamlessness, and monetary soundness of Bitcoin.”

Bitcoin is currently being traded around $10,250 and it has a market capitalization of $183 billion. In the last days, Bitcoin reached a new multi-year high in terms of market dominance compared to other digital assets. Now, its dominance is falling and it is currently close to 69.7%, according to CoinMarketCap.

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