Bitcoin volatility is a feature, not a bug.

One of the most common concerns when people first hear about Bitcoin is its volatility. “Isn’t it too unstable?” they ask. Over the years, I’ve heard the saying, “Volatility is a feature, not a bug,” but I didn’t fully understand it until I attended The Bitcoin Conference 2024.

During a brilliant talk by Sam Wouters on Bitcoin adoption in business, one point really stuck with me: not just that Bitcoin runs 24/7, but the shocking comparison to banks. Traditional banks, which we trust our money, are only available five days a week, eight hours a day. When you do the math, that means banks are closed for 6,627 hours each year—equivalent to 276 days.

You might think, “I can still use my money outside of banking hours, right?” Yes, but try making a large international transfer when the banks are closed, or even during a crisis. Imagine you’ve invested heavily in a financial instrument and, due to an unexpected event—a war, a sudden market collapse, or a “Black Swan” event—you need to remove that liquidity as fast as possible. How do you do that without a third party like a bank?

This is where Bitcoin’s liquidity comes into play. Bitcoin is the most liquid asset in the world. You can access it without needing permission, at any time, on any day, without barriers, no matter the volume or number of transactions. During major global events like the COVID-19 pandemic, the Japan carry trade crash, or wars, people seek out the most liquid assets to protect themselves from risks like margin calls. Bitcoin, because of its unmatched liquidity, often becomes the go-to asset in such situations.

Volatility: The Price of a truly free market

Now, let’s address the elephant in the room, volatility. Yes, Bitcoin is volatile. Its price swings can be significant. But as I pointed out on the title of this article, this volatility is a feature, not a bug. Here’s why.

Bitcoin’s volatility is directly tied to its liquidity and its global accessibility. Since Bitcoin can be accessed 24/7 by anyone in the world, its price reacts to events in real-time. Traditional financial assets, on the other hand, are largely shielded from these sudden price fluctuations because they are restricted by banking hours, regulatory barriers, and limited access.

While Bitcoin’s price may drop dramatically during global events like COVID, wars, or financial crises, those price movements are short-term. Historically, after such events, Bitcoin has recovered faster and delivered more significant long-term gains than “safe” assets like gold, bonds, or the S&P 500.

At this point, you might still be saying, “Even if Bitcoin’s liquidity and accessibility are advantageous, its volatility means I could lose value in a crash.” And yes, that’s true—your dollar-denominated value of Bitcoin could suffer in a downturn. But these major drops are typically short-term. Bitcoin tends to bounce back faster and higher than most traditional assets.

It comes down to a choice: Would you prefer short-term volatility with long-term gains, or stability with long-term losses?

Take the Euro, for example. It doesn’t experience the same volatility as Bitcoin, but its purchasing power is constantly declining. Over time, the Euro steadily loses value due to inflation, eroding your wealth little by little, year after year. Again, what do you prefer: a currency that seems stable but is always losing value, or an asset like Bitcoin that may be volatile but offers long-term growth and protection against inflation?

To wrap it up, Bitcoin’s volatility is what allows it to function as a truly global, liquid, and permissionless asset. In times of crisis, Bitcoin’s liquidity makes it a powerful tool for financial independence and protection. Unlike traditional assets, Bitcoin is free from the constraints of time zones, business hours, and third-party control. And while that comes with short-term price swings, history has shown that Bitcoin’s ability to recover and grow over the long term is unmatched.

Bitcoin’s volatility is not something to fear—it’s something to embrace. The next time someone says “Bitcoin is too volatile,” remember this: volatility is the price of freedom. And in a world where freedom is often limited by financial gatekeepers, that price is worth paying.