Bitcoin volatility

Chart of Bitcoin's realized volatility on 1-hour, 4-hour, 1-day and 1-week candles, with the BTC price overlaid.

What is realized volatility?

It is the standard deviation of price changes over the latest candles, annualized. 50% means that, at the current pace, the price typically moves around 50% up or down over a year. Bitcoin's volatility has fallen over the years: in its early cycles it often exceeded 100%; in recent years it has ranged between 25% and 80%.

What is it useful for?

Volatility tends to return to its normal level: calm periods with very low volatility tend to end in strong moves, and volatility spikes tend to coincide with sharp drops or vertical rallies. What volatility does not tell you is the direction of the next move.

Which candle size should I choose?

1-hour and 4-hour candles show market turbulence over days or weeks, useful for the short term. 1-day and 1-week candles show volatility regimes over months and years, and let you compare them with previous cycles.