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Embracing Bitcoin’s Volatility

Jan 7, 2021 · 5 min read

By Kevin Kelly, CFA

Key Takeaways

Bitcoin is capturing the mind share of younger generations because of its volatility and their appetite for risk will continue to drive speculation. Some argue bitcoin’s latest parabolic move is stealing market share from gold but that’s only the tip of the iceberg. For perspective, net outflows from the two largest gold ETFs (GLD & IAU) totaled ~$5.7 billion in Q4 2020; Bitcoin added ~$340 billion in total market value over the same period. Bitcoin wasted no time in the new year, kicking off 2021 with a +35% gain in its first week of trading. Notably, BTC is now one of the best performing assets since its previous December 2017 peak, recently surpassing even the almighty Nasdaq 100 on a total return basis.

Much has been made of bitcoin’s price volatility, especially among traditional investors who still hesitate to put their faith in a digitally-native asset that promises to redefine the very core of our financial system (hint:

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