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Analyst and author of the book “The Age of Bitcoin and the Great Harvest,” Adam Livingston, has assessed the likelihood of a repeat scenario for Bitcoin as low, citing a more mature market structure.
According to his calculations, Bitcoin’s volatility has been consistently decreasing over the past 11 years. This trend reduces the chances of a sharp decline similar to the one observed in 2022, which saw a drop from $47,000 to $16,600.
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“During the period of 2018-2019, the average 90-day annual volatility was 77.4%, whereas today it has fallen to 47.4%. This indicates a reduction in fluctuation amplitude by 39%. Bitcoin’s volatility is decreasing by an average of 2.71 percentage points each year,” Livingston stated.
To evaluate risks, the analyst employed a geometric Brownian motion (GBM) model. The calculations indicated that the probability of a 77% drop—similar to the decline seen in 2022—has decreased by approximately 30 times compared to the previous market cycle.
“Currently, the likelihood of such a collapse stands at around 0.19%. With the current realized volatility at 44.2%, the probability of a significant decline over the next year is estimated at 0.28%. In comparison, prior to the 2022 drop, this figure exceeded 13.25%,” the expert explained.
He assessed that peak volatility levels, which reached 139.4% during the pandemic, are now behind us. The upper limit of fluctuations is gradually decreasing and stabilizing around 47%.
Livingston identified several factors contributing to the decline in volatility:
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influx of capital through spot exchange-traded funds (ETFs) and corporate reserves;
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increased liquidity, which complicates sharp price movements;
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growth in market capitalization, making the asset more resilient to fluctuations.
In his view, Bitcoin has solidified its status as a macroeconomic instrument. He characterized expectations of a price drop to $35,000 as based on outdated market behavior models.
Previously, the founder of the consulting firm MN Trading, Michael van de Poppe, stated that after a decline in February, Bitcoin is forming higher lows, which may indicate a strengthening market structure.
