Bitcoin vs. FX

Deutsche Bank recently published a research piece that states 40% of Bitcoin trading is dominated by Japan. Former leveraged retail FX traders, colloquially known as “Messrs. Watanabe”, have accounted for nearly half of all cryptocurrency trading since China shut down cryptocurrency exchanges earlier in the year. It makes sense that “Mr. Watanabe”, has moved on from FX trading to bitcoin trading. EURJPY has a volatility of 7.77% and implied daily move of 0.49%. To put that in perspective, a 5.8% move in EURJPY would be a 6.8 sigma move. Put another way, there is a 1 in 100 million chance of that happening. Also, it requires less leverage to make more money trading Bitcoin than trading FX. 

Earlier this year, we pointed out that the Turkish Lira was 2016's most volatile of currency in the world. The Turkish Lira was indeed volatile again this year but still lagged Bitcoin. It has a volatility of 15.1%, with an implied daily move of 0.94%.

Bitcoin vs Energy Commodities

The above is hardly a surprise as we expected Bitcoin to be more volatile than currencies and equities. How about versus energy commodities which tend to be much more volatile than currencies and equities due to issues like storage constraints and weather. Once again Bitcoin outshines most energy commodities like oil and natural gas. Oil has a volatility of 22.8% and implied daily move of 1.43%, while US Natural Gas has a volatility of 45.4% and implied daily move of 2.84%.